7 money mistakes and how to avoid them

Managing your personal finances involves a lot of things and it’s easy to let some areas of your finances slip. So in this article, I have compiled a list of 7 mistakes I have made in the past and some words on how to fix them.

It should be known that all of these are my own opinions and provided for educational purposes and not advice. But you could probably stand to learn something from me here.

Mistake number 1: Too much focus on saving

Saving money is great and having sinking funds for me is essential but putting money aside to just sit there isn’t necessarily doing the best with your money.

Is there something you can do with those savings to grow your wealth instead? Maybe paying off high-interest debts, or you guessed it… investing.

It’s important to have money in place for emergencies but if you are putting money to one side without thinking about its purpose then it’s time to start putting your money to work.

Mistake number 2: Being loyal to your service providers

I think by now most people know that switching your provider can save you money but even today not everybody does it. There are lot’s of switching services out there that can make the job a lot easier.

So if you are out of contract, have a look around, see what you could save and don’t forget to check things like cashback sites. I have made quite a lot of money from Quidco from some of the switches I have made in the past.

Sometimes my bills haven’t gotten any cheaper, so some people wouldn’t switch perhaps but checking the cashback sites I’ve gotten £20, £50 even £100 from switching.

Do this for everything you can. Banks will offer you money and benefits for switching. If your phone contract has ended and you don’t want a new phone, look at some of the sim-only deals out there.

Car insurance, home insurance, gas, water, electricity, TV services, broadband, phone try not to miss any opportunities for new customer benefits or savings that are out there.

Mistake number : Forgetting to cancel

Have you ever taken up a free trial and then forgotten to cancel and ended up paying out for a service you don’t even use for a month or perhaps even more? If you sign up to something like this, only for the free trial, you can check to see if you can cancel it online from day 1. Sometimes you can, other times you have to wait until the end.

If you do have to wait, then set a reminder the day before.

There are lots of subscription services out there that are so easy to jump in and out of now, that if there is something you haven’t used recently. Consider cancelling it for a month, see if it’s something you miss or not. You can always start your subscription up again.

Mistake number 4: No budget

The most powerful thing in my personal finances is my budget. I have a recent video that talks about a budgeting strategy that I use. You can check it out here.

How can you have control of your finances if you don’t know what is going on? A clear understanding of what’s coming in, what’s going out, your sinking funds, investments and knowing what your money is doing is paramount.

A budget does not have to be a means to make you cut back or miss out. It is there to help you understand your money. If you don’t have one then I suggest you really do some research and find a budget system that will work for you.

I have a budget spreadsheet that you can use for free. You can download it here.

Mistake number 5: Single of source income

So you have a job, perhaps it pays well, perhaps it doesn’t. Maybe you like it maybe you don’t but it’s a reliable, consistent form of income. What happens if something happens to that job? Recent events showed us working hour adjustments, pay reductions and sadly a loss of many jobs.

Having another source of income not only helps spread out some of the financial pressure across more than one source, but it can also be a great way to top up savings, investments or chip away at debts.

There are so many ways out there to make some extra money. So many people are now getting into side hustles they can do from home on their phones or computers.

Another quick note on jobs, mistake 5.5: Not negotiating your wages. It isn’t always an option but when you start a new job you have an element of control. They have chosen you as well as you choosing the job. So have a conversation about money or benefits and see where it may take you.

Mistake number 6: Not forward thinking

Have you ever been guilty of making an expense and thinking to yourself “I’ll worry about that later?” You should aim to always have a plan for what’s happening with your money.

If you want a takeaway or a new top then that should be part of your financial plan. I mentioned how important a budget is to me, well that would let me know what to do and to plan for those potential impulse purchase situations.

Coping with debt is a real challenge and if you need advice, there are charities out there you can talk to. Not being able to afford it isn’t something you should be ashamed about. It can be easy to fall into the habit of saying you will worry about it later and letting things snowball.

Mistake number 7: Intimidated by money

Do you take any opportunity to step away from a financial decision when you can? Perhaps leaving your partner to deal with ‘all the money stuff’? Or have you been avoiding investing because you are intimidated by all the options?

Our relationships with money can be as complex as with people. Outright avoidance is probably not the answer though. It’s easy to be scared of what you don’t know, so what can you do about it? Learn.

There are lots of people, like me, out there putting out financial education on all sorts of topics, doing your research and educating yourself. Things will suddenly feel less scary and you can take the reins and not just be in control of your money but have a plan and know what your financial goals are and how to work towards them.

If you want a more personal path to financial education then check out themoneynook.com where I am running courses and live Q&A sessions where you can ask me your questions.