When you’re saving money and managing your finances, you’re the CEO of your home. You need to make the right decisions to avoid the consequences of mismanaged money, just like a business. Here are 25 of the most common financial mistakes a household CEO can make.
1. Over-insuring yourself and your possessions. Sometimes you want more than the minimum coverage, but often the minimum is plenty.
2. Giving in to impulse buys. Avoid buying anything without at least a day to think it over.
3. Having a poor attitude about financial matters. If you’re self-defeating from the outset, you won’t be able to make progress.
4. Co-signing on loans for anyone. Even if you’re simply acting as a safety net, expect to have to pay the loan back yourself in a worst-case scenario.
5. Spending more money than you earn each month. If you’re paying more than you earn, you need to make lifestyle changes to either increase your income or decrease your expenses, otherwise debt will continue to rack up.
6. Lacking the ability to say no. You don’t need to have the best of everything just to keep up with the neighbors.
7. Not having a will or a trust to dictate how your assets will be dealt with after your death.
8. Throwing away edible food based on arbitrary expiration dates or as leftovers. Throwing away edible food is throwing away money, and can cost $1,400 or more each year.
9. Using a credit card for a cash advance. Cash advance from credit cards begins to accrue interest immediately, so every penny withdrawn costs more to pay back.
10. Using emergency money or retirement savings for immediate, non-emergency purchases. A television or computer is not worth being too poor to afford medical care.
11. Paying extra to save little. Don’t drive out of your way to get slightly cheaper gas, and don’t buy extra groceries you don’t need just to use a minor coupon.
12. Not shopping around for deals. Saving money is much easier when you shop for bargains in all your purchases.
13. Paying the minimum for credit card and other debts. The less you pay each month, the longer interest has to accrue and the longer it will take to pay off.
14. Racking up credit card debt that you can’t pay off each month. The interest rate on credit card debt is too high to justify not paying it off immediately.
15. Not keeping an emergency fund. An emergency fund should be even more important than saving for retirement, in case of job loss or medical problems.
16. Not including your spouse in decisions. Even if only one of you makes the majority of the money, it goes toward both of your standard of living, and you both need to be involved.
17. Buying a larger home than you need. More rooms is more work to maintain, more property taxes and more furniture to buy for the rooms.
18. Not negotiating your starting salary. Any job you have, your salary increases will depend on your starting salary.
19. Saving non-emergency money when you have credit card debt. The interest on the debt is likely higher than the interest on your savings account.
20. Not saving for retirement. It’s easy to put away 10 percent of your income for retirement, and it’s never too early or too late to start.
21. Not tracking your income and expenses. If you don’t know how much you’re spending and how much you’re making, you can’t plan to live within your means.
22. Keeping memberships with monthly payment plans, even when you don’t use them. No matter how small the payment, you can probably stand to cut the service.
23. Buying a new car instead of fixing an old one. New cars lose most of their value in two or three years, so the money you lose from selling one and buying a new one is high compared to the cost of repairs.
24. Using payday loans. Payday advance loans are scams that prey on people with high interest rates that compound frequently. If you can’t afford something now, you won’t be able to afford it later when the loan comes due.
25. Being impatient. Saving money takes time, and we can’t always afford everything we want right away.