When we make up our minds to change our bad money habits and become be proactive about our finances, it can often seem overwhelming. Where do you start? What mistakes are you making now? What do you need to do to get your finances on the right track?
If you’re serious about taking control of your finances, then you need to realize when you’re making these five financial mistakes and what you can do to get back on track.
1. Not Saving for Retirement
A lot of twenty-somethings don’t even think about retirement savings because they assume they have their whole careers ahead of them. They can put off saving until later. That’s a huge financial mistake.
Nearly a third of Americans aged 55 and older don’t have any retirement savings. The great thing about saving when you’re young is that you have compound interest on your side. The moment you get your first job, start socking away 10% of your paycheck toward retirement.
You may think there’s no way you can afford to let go of so much of your paycheck, but the truth is, the older you get, the more expenses you tend to have. It just gets harder and harder to part with any of your hard-earned money.
Even if you have student loans, make every effort possible to contribute toward retirement, whether you have a 401(k), a Roth IRA, a traditional IRA, etc.
2. Not Having an Emergency Fund
If you’re lacking an emergency fund, that means you’re one big emergency away from a financial meltdown. What happens if you have a health crisis or if your car breaks down and you can’t get to work for a week?
Start off by setting money aside every paycheck specifically designated to build your emergency fund. Here are 22 ways to build an emergency fund.
3. Spending Everything You Earn
Are you not setting aside any money for savings? In addition to an emergency fund, you need to have savings designated for your specific goals. Whether you’re aiming to buy a car, save up for a vacation, or establish a Christmas fund, there are a variety of goals throughout the year most Americans have that cost money.
Start reaching those goals by setting aside money throughout the year.Are you making these 5 financial mistakes? Find out how you can get back on track with your #money Click To Tweet
4. Trying to Keep up with the Joneses
With the advent of Facebook, it can be really easy to fall into the “Keeping Up with the Joneses” trap. Every time someone posts a photo of their vacation or shiny new car, you start to wonder why you can’t have those things. After all—you deserve them too, right?
Steer clear of this temptation by finding enough strength within yourself to be confident of your lifestyle and what you can comfortably afford. The Joneses’ lifestyle may look lavish on Facebook, but you’re also not seeing the bills that come with what’s depicted in those photos.
5. Paying the Minimum on Your Debt
Who wants to spend years paying off their debt and throwing money away on interest? Be proactive and pay down your debt first. Getting rid of your debt will give you peace of mind and provide you with a great financial starting point for the rest of your life.
This may be one of the hardest steps to take, but once you’re intense about paying off debt, anything is possible.
Are you guilty of making any of these financial mistakes? Which ones? What have you done to get yourself back on track?