We all want to make the most of our money, but very often our money makes the most of us. Americans continue to rank their finances as the top stressor in their lives. What’s more alarming is the continued financial disparities faced by the LGBTQ+ community, specifically women. There are three tragic statistics to know:
So, what can you do to take better control of your money? Start by avoiding the most common money mistakes that can prove significantly costly over time.
1. Misuse/Abuse of Credit Cards. General mismanagement of credit cards costs the average consumer tens of thousands of dollars in interest expenses over their lifetime. The practice when using a credit card: pay it off and don’t carry a balance. And if you’re trying to buy something you know you can’t pay off right away, then wait until you can pay it off.
2. Not Getting Properly Insured. Sometimes “saving 15% or more” isn’t the best approach, especially if you aren’t considering the ramifications of underinsuring yourself. Whatever you saved by choosing a lower limit can come back to bite you. Insurance is there to protect you when life takes a sudden turn for the worse. You don’t want cheap, you want right!
3. Not Having Any Insurance. Even worse than not having enough, is having no insurance at all. What if you’re injured and you can’t return to work for the next eight months? If you have no disability insurance, it is highly unlikely your employer will pay you to not work. So how long can you pay your bills without a paycheck? Getting the right forms of insurance (medical, disability, life insurance, etc.) doesn’t just protect you, it can actually save you significant amounts of money over your lifetime.
4. Not Knowing What You’re Spending. Only 50% of Americans acknowledge having a budget or even a plan for what they spend. While this may sound simple and perhaps obvious, not planning your expenses each month can have significant financial consequences down the road. Those who keep a budget are more likely to stay on top of their expenses and less likely to splurge on something that might hinder their ability to pay bills.
5. Not Saving Money. When is the best time to start saving money? Yesterday! With a shockingly high number of people living paycheck-to-paycheck, it is critical to create margin for yourself by saving a portion of your income every month. Having money in the bank to deal with issues that pop up and live more comfortably gives you a much higher chance of life success.
6. Not Investing Wisely. Investing can be tricky, and many people put their money into things based on reading a blog, listening to a podcast, or tips from friends. While gathering information from a variety of sources can help, not all sources are qualified to provide you with advice. All investing involves risk, including the risk of loss, so be a wise investor by getting well-sourced knowledge about a particular investment before putting your hard-earned money into something. Working with a financial professional also helps.
7. Not Having a Money “Vision.” The adage “failing to plan is planning to fail” proves abundantly true when it comes to money. Start with intention and create a vision for what you want your money to ultimately do for you. By setting a vision for your money, you can create a framework for how to direct your money and avoid behaviors that could undermine it. Maybe eating out too much each week is keeping you from taking that overseas trip, so by having a vision, you can start building habits to reinforce achieving it.
Remember, money is a means to an end, not the end itself. By taking control of your money, you can take control of your life! If you want some tips for what to do, check out my tips to financial success.