Even though I run a personal finance blog, it doesn’t make me perfect. I’ve made a ton of money mistakes in my life and I’m still making mistakes with money. Granted I’m making fewer mistakes because I’ve learned a lot from those mistakes.
I’m sharing this with you because I understand it’s hard to change when you think you’re making mistake after mistake. Or you might beat yourself up because it seems like you’re not trying hard enough. It might be easy to look at someone on the internet (say me, for example) and think I have it all together, but I don’t.
So I’m here to share those mistakes that I’ve made and continue to make. And I know this last part is confusing, but I’m also sharing “mistakes” I’ve made that other people think are mistakes, but I don’t.
Let’s get started!
Yes, I overspend sometimes and go over my budget. Just because I make a budget doesn’t mean I follow it perfectly.
For example, these past few months I’ve become obsessed with houseplants to the point where most people think I’m crazy. There was one month that I literally purchased over 40 houseplants. Should I have? No! Did it make me SUPER happy? Yes and I stare at them all day. I had to give myself a bonus just to cover my houseplant addition that month. (I run my business so I was able to give myself a bonus).
However, most months I do not overspend especially because we have a lofty goal of paying off $27,000 of student loans.
Below is a picture of my plant room. I decided to take the Peloton out for full maximization of plant space and I’ve probably added 15 houseplants to this room since this picture was taken.
#2 Not taking advantage of credit cards
If you’re someone who cannot handle credit cards responsibly, that’s completely fine. Don’t sign up for credit cards and also don’t beat yourself up for not being able to have a credit card. Some people overspend on credit cards because they think about the rewards they’ll get if they spend more money. There are pros and cons to credit cards, so it’s okay if you don’t have one or don’t want one.
Up until I was 28 years old, I wasn’t really taking advantage of credit cards. Now I’m obsessed with credit card hacking and taking advantage of sign-up bonuses.
Right now I’m currently working on getting the sign-up bonus for the Citi American Airlines card. For the bonus, I have to spend $2,500 in the first 3 months to get 50,000 points, which is about $600 in flights.
Another credit card I recently took advantage of was the Chase Freedom Flex card. I got $200 cash back for spending $500 in the first 3 months. So easy!
Credit cards work for me because I do my regular spending on them (think grocery shopping, memberships, etc.) and I pay off the credit card immediately whenever I use it. Interest never even gets the chance to even think about accruing.
#3 Not contributing to retirement
I went years without contributing to my retirement fund. I don’t think I started until I was in my mid-twenties. I remember starting jobs and Human Resources would ask me if I wanted to contribute to a 401(k) and I’d always say no. This is something I regret because the earlier you start contributing for retirement, the better because of compounding. Compounding in investing means generating earnings from previous earnings.
Below is a picture from the @personalfinanceclub Instagram page (posted here with permission). This infographic shows two women who both take home $4,000 per month from 25-64 years old. Ashley spends $4,000 and doesn’t invest any money and gets into retirement with $0.
Amanda spends $3,200 and invests $800 a month and at 65, has a net worth of over $2 million dollars. @personalfinanceclub is (in my opinion) the best resource for learning about investing for your retirement. They even have an affordable course here (I think it’s like $80 bucks or something) and it teaches you everything you need to know to fund your retirement responsibly. I bought this course with my own money so I can say 100% I recommend it as well.
#4 Not budgeting
I knooooow a lot of people hate budgeting, so they don’t do it, but it’s definitely one of the biggest mistakes you could make with your finances. Budgeting isn’t penny pinching, it’s giving a job to every dollar you take home. So you can still spend money on things you enjoy, but you’re putting a specific amount to it.
Once you budget for a couple of months, it’ll become a habit and so easy. I use the free version of the EveryDollar app to budget and it’s been my go-to method for years now.
Helpful articles to read on this topic:
- How To Create A Realistic In 8 Steps
- How To Pay Yourself First (Use This Method If You Hate Budgeting)
#5 Not having an emergency fund
You need an emergency fund. Sorry to sound like a broken record, but you need one. I didn’t have an emergency fund for a long time and it was scary! Any time a surprising bill came up, I would break out in a sweat and get so much unnecessary stress that could’ve been avoided if I had an emergency fund. My emergency fund is a lot lower than I’d like it to be right now, so it’s something I’m working on to beef up.
Another helpful tip is to store your emergency fund in a bank savings account that has decent APY. For example, my emergency fund is in an Ally savings account getting about .50%APY right now. Before March 2020 when you know what happened, my account was getting 2%APY, which is insane and I miss it, but alas, interest rates change a lot for reasons I don’t care to explain, but if you want to know why interest rates change so much, read here.
#6 Not making long-term financial goals
The key to long-term success is having financial goals. Without financial goals, you can get lost. When I don’t have a financial goal, I notice I tend to spend more and my savings rate is much slower.
As I’ve shared earlier, our current savings goal is to pay off husband’s student loans and we’re almost there!
If you’re struggling with achieving your financial goals, read my one of my newest posts on things to do to complete your financial goals. Creating a goal is easy, but the journey to getting there can be harder sometimes.
Helpful articles on this topic:
#7 Buying a new car
I bought a brand new car in 2018 and although a lot of people think it’s a financial mistake, I would probably make the same “mistake” again. I love my new car just as much as the day I got it. Almost four years later, I still have the same car, and it hasn’t had any mechanical issues. I bought the car for about $25,000 (including everything, taxes, registration, etc.). Today, I can sell the car for $19,500 according to KBB. So although it’s lost value, I love how reliable it’s been and how I don’t have to waste any time in shops getting it fixed.
My first two cars were used and broke all the time, hence why I just couldn’t buy another used car. I was bitter against used cars! However, in the future we plan on buying a truck or SUV to rock crawl and RV with. We’ll most likely buy it used because those cost a lot more and I’m just not willing to fork out $75k for a nice truck, haha.
#8 Paying off debt and not investing at the same time
When my husband and I started paying off his student loans, we were barely investing in his retirement. I think we were contributing like 8% and that’s only because we wanted to meet the employer match for his retirement. We made a lot of headway in the first year of paying off his student loans (we paid off about $40,000 in 9 months).
However, a few months later we decided he needed to contribute way more to his retirement since he started investing late (he’s 36 now). We’re currently putting in 15% of his salary into his retirement and once his student loans are paid off, we’re maxing out his 401(k) and IRA. At some people we won’t be able to contirbute to a Roth IRA because of income requirements, but until then we are contributing to it. (I know there’s a backdoor Roth IRA but it’s still so confusing to me).
People argue to invest for retirement and pay off debt at the same time because of interest rates. For example, if I have a student loan at 3.5% and my investments can potentially make 8%, you can see why people argue to invest and pay off debt at the same time.
That’s it for this one!
I hope you guys were able to relate to some of these mistakes and know that you’re not alone in your money journey. We all make mistakes, even the people you think are perfect online.
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