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Financial Pitfalls And Money Mistakes To Avoid At All Costs

June 15, 2022 | June Mckaig

mistakes to avoid 

When we choose between two products, we always ask: “What will give me better value? Is this one going to be a good buy or a total dud?” We check reviews, we think about the pros and cons—and we hope that with proper research, we won’t experience shoppers’ regret.

We should apply the same thought process to bigger financial decisions that have a huge, long-term impact on our financial wellness and peace of mind. Here are some money mistakes and financial pitfalls to avoid.

Financial Pitfalls To Avoid

Not Having A Budget

A budget can help you plan your expenses and set aside money for long-term goals. But many people don’t have a budget—or stick to it. And this can lead to everyday money mistakes like impulse purchases or frivolous spending, which add up to hundreds of dollars over a year.

Not Investing In Your Career

One of the worst money mistakes is not actively developing your ability to increase your income. A job may be able to cover your needs today, but can it help you save enough for your retirement, or meet the bigger financial demands of raising a family or paying for medical costs in your old age?

So, some of your time and money should go into self-development: taking classes or any other form of training that can beef up your resume, or actively searching for opportunities instead of staying at a familiar but dead-end job.

Giving In To Lifestyle Bloat

One of the most common (and most damaging) financial pitfalls is lifestyle spending—or spending too much on clothes, dining out, travel, or other status symbols like cars. This usually happens when people have a slight increase in income and succumb to the social pressure to “live it up”.

If your income increases, put that extra money into savings and investment.  While you can treat yourself for your hard work, it’s more important to secure your financial future.

Not Having A Rainy Day Fund

According to financial experts, you should save the equivalent of 3 to 6 months’ worth of living expenses. This emergency fund can help tide you through sudden, unexpected loss of income. If you have dependents, like children or parents who rely on you, you may even want to save more than that.

Using Your Credit Cards For Everyday Purchases

Credit cards are convenient, but it is still better to use them only for big purchases that you need to buy on installment, or for emergency purposes. For everyday purchases, it is still better to use cash.

using credit card

That’s because using cash disciplines you to stick to planning your purchases and stick within the limit—after all, you can only spend what’s literally in your pocket. You ask yourself, “Do I really need this? Should I buy it today, or is it better to wait until next time?”

Losing Track Of Bills And Due Dates

This is one of the most common mistakes—especially among busy people! It’s understandable: with all the demands of work, housework, and perhaps raising a family, it’s easy to lose track of time and forget to pay a bill.

However, late payments can affect your credit score, and lead to late fees or reconnection fines. Set up a notification system so you’re reminded of your bills or arrange for automatic payment of recurring bills from your bank account.

Not Preparing For Seasonal Expenses

Do you have the same budget for every month of the year? That’s one of the biggest money mistakes that people make. While some expenses like rent are fixed, there are expenses that can spike during certain seasons, like holiday parties and shopping or tuition payments. For some freelancers or gig workers, income levels can also go up and down.

Your budget should take these financial fluctuations into account, so you can plan ahead for the lean months.

You Can Recover From A Financial Crisis

If you’ve made money mistakes or fallen into a financial pitfall, don’t give up—it’s never too late to take charge of your expenses, learn the right habits, and recover from a financial crisis.

Start by tightening your budget, so you can slowly build up your savings. Look for ways to raise extra money, like taking on an extra shift at work, or selling things you don’t need.

For sudden, urgent expenses where you need to raise money quickly, you have the option to get an auto title loan online.

This is a short-term loan that uses your vehicle title as collateral. You can borrow up to $15,000 based on the vehicle type, condition, and mileage.

Unlike bank loans, an auto title loan online does not have a credit score requirement or take a long time to process. The key requirement is that the title is in your name and that the title is lien-free (or does not have any other loans attached to it).

Apply For An Auto Title Loan Online Now

Southwest Title loans makes it very convenient to apply for a loan. Fill out the online title loan inquiry form, and one of our loan representatives will call you to explain the process and answer your questions. Then, go to the nearest branch with a state-issued ID, the title, and the vehicle for inspection.

After inspecting the vehicle and verifying documents, the loan representative will determine the loan amount you qualify for. Then, after minimal paperwork, you receive the money the same day or the next business day. The in-store process can be done in as little as 30 minutes.

Contact us to find out more about auto title loans, and other ways you can raise emergency cash.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

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