Expensive Errors: How to Avoid the Most Common Money Mistakes

Contrary to popular belief, you don’t have to establish your own business, float it on the stock market and follow all of the other stereotypical steps that supposedly make someone rich. Believe it or not, anyone can do it – including the Average Joe.

Sure, their potential is capped somewhat as like it or not, you do need money to make money to some extent. However, with a few shrewd moves you can get your financial house in order, and through today’s post, we will outline some of the common mistakes that people tend to make which often thwart this plan.

Mistake #1 – They don’t account for future costs

One of the most common mistakes we see is people just living in the here and now. In other words, they don’t stop and think that life will turn on its head at some point – and the costs that they once had just won’t exist anymore. And, vice versa, new costs will enter the picture.

In relation to the latter, there is a whole host to think about. Funeral costs, university fees for the kids and even elderly care all need to be thought of. Don’t think that just because the mortgage has been paid off, you’ve got a clear route home.

Mistake #2 – They save their money (or don’t save at all)

In some respects, there’s nothing wrong with saving – it does show that you have a discipline to money.

The problem is that in the long-term, saving will lose you money. The interest rates you are receiving from the bank are less than the power of inflation, meaning that your money is worth far less each and every year. Instead, think of an investment plan. Sure, you do need some safe bets, but you also need some long-term investments that are going to earn you a lot more than the current inflation rate.

Mistake #3 – They don’t use their pension

This is one of the biggest sins that anyone who wants to carve a successful financial future will make. Pensions have been a lot in the news over recent times, but they will still look after you much better than most forms of investment.

Just remember, your employer will match whatever you contribute (to a reasonable level, depending on the company you work for). In some ways, this means that pensions are free money, and let’s not also forget that you are not taxed on these contributions either.

Mistake #4 – They live beyond their means

This final mistake really relates to your lifestyle. Every time some people receive a pay rise, they are quick to increase their levels of spending. It means that they never have more disposable income, so to speak, everything is following an incremental line.

Well, in the interests of building wealth, this way of thinking needs to change. Try and live within your means, so if you do receive an adjustment to your salary, don’t think that this automatically entitles you to spend a lot more.