My 4 Biggest Money Mistakes

biggest money mistakes

I don't know if anyone goes through life without making a few money mistakes. I've certainly made my fair share: shoes that look great on the shelf but hurt when you wear them for more than five minutes. Those jeans that will look magnificent once you lose 10 pounds but then never do. While I have some money regrets, I'm also grateful that I know better now.

4 Common Money Mistakes

While my experiences may be unique to me, these are still very common money mistakes. They can wreak considerable financial havoc in your life, but they are also readily fixable.

Money Mistake #1: Not Following a Budget

Budget used to be a dirty word in my home. I hated them. They felt restrictive and brought out my natural defenses. Plus, I told myself that I didn't need to budget. I lived within my means and had no debt, so why did I need a budget?

3 Big Reasons Why I Needed to Budget:

  1. Upon closer examination, I really wasn't living within my means. While I paid my credit card bill in full every month, the reality is I shouldn't have had a bill in the first place. I wasn't using my card on regular expenses to earn reward points. I was simply buying whatever I wanted. Sometimes I even needed to dip into my savings to pay my credit card bill. D'oh.
  2. I had no real idea on how I spent my money. It was just gone by the next paycheck.
  3. I really wasn't spending my money on what mattered most. More on this later.

Clearly, I needed to budget but detailed spreadsheets overwhelmed me and made my eyes twitch. Eventually I stopped using that as an excuse. The truth is following a budget is more important than the type of budget I use. My budget is super simplistic but it keeps me from overspending and helps me make smart money decisions.

Money Mistake #2: Not Having Clear Goals

The old me had vague goals. I was saving for retirement, although I didn't know when or what I wanted to do. I was saving for a house, even though I had no timeframe and mixed feelings about being a homeowner. I wasn't motivated at all to achieve my goals because I really didn't have any that inspired me to save more or change my money habits. This is still a work in progress for me. My goals continue to evolve, which isn't necessarily a bad thing, since I want to be fully committed to achieving them.

Money Mistake #3: Not Being a Conscious Spender

When I look back at some of the things I bought, I can only shake my head. My emotions drove much of my spending. I told myself "I deserved this" or shopped because I was bored. These days I don't allow my emotions to control my money; I do and it feels great. I comparison shop and look for bargains on the things that I need, so I can save money for the things that I truly want. This has been one of my greatest lessons. My budget may be smaller today but I am also much happier now that I am a conscious spender.

Money Mistake #4: Not Investing Sooner

I remember receiving the 401k enrollment forms as part of my benefits package when I started my first job. I had no idea what a 401k even was! Naturally, I tossed those papers aside and forgot about them. Finally, when I was 28 years old, I enrolled, which isn't a terribly late start, but knowing what I know now ... boy, do I wish I would have enrolled earlier.

Additionally, because I wasn't following a budget, I didn't realize how much I was under-investing. I just spent my money mindlessly when I could have re-directed that money towards my goals. I realize now how much my delay in investing and not contributing what I truly could afford cost me. My money would have had plenty of time to compound and grow before I needed it.

A More Money Savvy Me

I can't undo past mistakes but only learn from them, and I am happy to say—lessons learned. Now I understand how my money decisions impact my well-being, so I no longer rush decisions or let my emotions overrule my priorities. Money no longer intimidates me, and I make choices that honor my goals.

Your Turn: What Are Your Biggest Money Mistakes?

I've shared mine, so now it your turn to share some of your money mistakes.


    • DC @ Young Adult Money

      DC @ Young Adult Money 10/23/2013 5:25 a.m. #

      I think all 20-somethings should be encouraged to open a 401k or IRA as soon as they can out of college. Once you have money automatically going into a retirement account you stop missing them and get used to the cash outflow.

      • Tanya @ Eat Laugh Purr

        Tanya @ Eat Laugh Purr 10/23/2013 2:05 p.m. #

        I agree, DC. While college graduates may be more familiar with a 401k than I was (more years than I care to admit) back then, they still don't have a real sense of urgency to enroll right away. But it can make a HUGE difference. And like you said - the sooner you do it the last painful it feels to your cashflow. It's far easier than most people realize.

    • Pauline

      Pauline 10/23/2013 6:51 a.m. #

      One of my many mistakes was buying a property I didn't research enough. It took years to sell and was pretty annoying, although in the end the price did go up.

      • Tanya @ Eat Laugh Purr

        Tanya @ Eat Laugh Purr 10/23/2013 2:08 p.m. #

        I'm glad it still worked out for you, Pauline. I don't own any property yet but it something that I hope to eventually do. Home prices in LA are quite high so I'm trying to figure out where buying a home fits in with all my other priorities.

    • Get Rich With Me

      Get Rich With Me 10/23/2013 8:01 a.m. #

      Check my a/c balance - how much is in there - ok how can i spend it.
      Never a thought for a pension or a rainy day.
      When the rainy day out come the credit cards
      I lived like this for so long ........ how could I be so stupid.

      • Tanya @ Eat Laugh Purr

        Tanya @ Eat Laugh Purr 10/23/2013 2:10 p.m. #

        My parents were quite conservative with their money so I really feared debt. But at the same time, I wasn't really "smart" with money either ... obviously! Some days I get stuck in the woulda, shoulda, couldas too. But at least we both know better now! Some people never figure it out.

    • Krista

      Krista 10/23/2013 10:47 a.m. #

      I think the second mistake about clear goals is one of the most important points in anyone's financial plan. If you don't know what you want or why you want it it's incredibly hard to feel motivated to do well financially and make great decisions.

      • Tanya @ Eat Laugh Purr

        Tanya @ Eat Laugh Purr 10/23/2013 2:13 p.m. #

        I couldn't agree more, Krista! My lack of goals made it so easy to spend my paycheck on things that I don't even remember and I had not motivation to increase my saving/investing efforts. *Head slap* The sad part is I was always very good about setting and achieving work goals but didn't apply that same ethic to my personal goals. Something I definitely regret.

    • Shannon @ The Heavy Purse

      Shannon @ The Heavy Purse 10/23/2013 11:59 a.m. #

      Well, you know my feelings about budgets, so I'm glad you are board with them now. :) I remember that you weren't too fond of them when we started working together. While goals always evolve to a certain extent, once you firm yours up a bit, it will definitely make it easier for you to save for them. It makes me sad to think how many college graduates are like you and have no real idea what a 401k even is. The missed opportunity.... ack!

      • Tanya @ Eat Laugh Purr

        Tanya @ Eat Laugh Purr 10/23/2013 2:16 p.m. #

        I still remember the day you told me that budgets gave you freedom, which was completely opposite of how I viewed them. But your words stuck with me and even though it took far too long to actually follow a budget, I'm glad I did! And yes, it does me freedom. :) Yeah, I think a lot of millennials view 401ks as something they need to do later - like their parents do, rather than something to do now.

    • krantcents

      krantcents 10/23/2013 7:09 p.m. #

      A budget would cure those problems! A budget is supposed to help you reach your financial goals. It also helps control spending. Saving investing should always be part of your budget.

    • Brent

      Brent 10/26/2013 2:25 a.m. #

      Have you thought about using financial automation to avoid the need to follow a budget? If you have all of your accounts and automatic savings plans and transfers set up you should rest easy know that what is left over in your account is the disposable income that you've predetermined that you're okay with spending however you want.

    • Frugal Winnipeg

      Frugal Winnipeg 10/27/2013 4:18 p.m. #

      I made the mistake years ago forgoing a company matched RSP (401k) offer. In hindsight it may have been one of my biggest missed opportunities, as following employment has been contract/self employment where such matched offers just don't exist. If you are reading this, in your early 20s or late teens, contribute to your retirement!

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