Centsible Life

Helping Women Live Healthier, Happier, and Wealthier

Top 5 Financial Mistakes

By 18 Comments

Reading FrugalDad’s post this morning over coffee and breakfast I started thinking about all the mistakes we’ve made in the past. I used to dwell on those mistakes and it would cause an inertia that made it seem like no matter what small progress we made it wasn’t enough. This would lead to feelings of despair, which would cause me to stick my head in the sand again. (you know that’s not good!)

By following other personal finance bloggers, and reading books like I Will Teach You To Be Rich, I have been able to see that EVERYONE makes stupid mistakes. Ramit even has a dedicated ING Savings Account called “Stupid Mistakes!” Brilliant.

Looking back at our mistakes almost makes me laugh now. My new perspective had me rehashing a few things we’ve done, and I realized that they all fall into 5 categories.

1. Making a budget with no room for “stupid mistakes”.

Whenever we tried to clean up our debt in the past we had a very strict budget, and inevitably ended up feeling deprived and spending more than we should have. Which leads to a vicious cycle of buckling down, feeling deprived, spending, and then paying it back by buckling down, etc. For me this also includes the inevitable unexpected bill/expense that we couldn’t handle without an emergency fund in place.

Learn more: Balance Spending and Paying Off Debt

We get around this now by paying the kids an allowance, and allowing ourselves small treats. We also planned an evening out that is coming up this month (to see Flight of The Conchords in concert) and that allows us to look forward to something fun. I also pad our grocery budget slightly so we’ll be less tempted to eat out.

2. Spending before you have the money.

For most people this one will elicit a big, “Duh!,” but how many times have we talked about not buying on credit only to say, “but I really NEED this right now.” (said like a greedy 10 year old in a toy store) Don’t fall for your own double talk! I’m not saying cut up your credit cards, just use them wisely! Make sure you create barriers to purchasing things. Use a 24 hour rule, leave your cards at home, or think about where that money would go otherwise.

Learn more: 5 Steps To Get Your Student Ready For A Credit Card

3. Turning down FREE money.

Ignoring your 401k is the most obvious example. We spent 2 years saying we would pay off debt first then start contributing before I wised up and did the math. The money we’d put in for the match wouldn’t make a big enough dent that it would matter.

Also by not taking the time to assess your expenses you are often throwing way more $ out the window than you think.

Learn more: How We Saved $17,000

4. Not educating yourself about the home buying/car buying process.

This is the largest purchase most people make, yet time and again you hear stories of how people are taken advantage of. People that sell cars and homes have a huge advantage over you. They do it every day, while you may buy a few homes in your lifetime and a car every 10-15 years. You need to invest your time as these are 2 of the largest purchases you can make and they will affect your financial goals the most over the course of your lifetime.

Learn more: What cars earn best resale value?

5. Not allowing yourself to have any fun.

I’m a big proponent of finding balance in your life. It is something having kids taught me early on. Make sure you make time for your spouse or partner, family or kids, and friends. Without people to share your successes with all the money in the world means nothing!

Learn more: Balance is a 4 letter word!

What was the biggest mistake you made with your finances?

My biggest mistake would likely be having a family so young, but that’s not something I can or would change!

Kelly

About Kelly


Kelly Whalen is the founder and editor of the Centsible Life. She started the blog in 2008 as her family faced a mountain of debt and the fixer upper they purchased became a FIXER UPPER. The website was born out of her desire to share what was working (and what was not) on her family's journey to financial security. Kelly lives in Minneapolis with her family.


Comments

  1. You are spot on about the house/car purchasing decision. The biggest mistake I made was buying a new car at an outrageous interest rate (23%!) without really realizing what I was doing. I was just so caught up in the excitement of “New car!” and the fact that they would even give me a loan in the first place, I would’ve signed anything. Be wary.

  3. Hi, good post. I have been thinking about this topic,so thanks for posting. I’ll certainly be subscribing to your site.

  4. I surfed over from the 31 Day Challenge too. Great post and I have to agree with #5 - you can’t stay stressed all the time and be healthy. I would say my biggest mistake was getting credit cards in grad school with very limited income and no way to make more money. Who knew 🙂

  5. I surfed over from the 31 Day Challenge too. Great post and I have to agree with #5 - you can’t stay stressed all the time and be healthy. I would say my biggest mistake was getting credit cards in grad school with very limited income and no way to make more money. Who knew 🙂

  6. VERY nice post, Kelly!

    My biggest mistake has been valuing high quality products even when I couldn’t afford them. Sure, Cutco knives are a great investment, but buying them when your joint income is $40k/year before taxes might not be the best use of that income!

    I had to face some harsh realities (and stop letting salespeople into my house) before we were able to save up and buy our first house. Fortunately, I was married to a husband who, although he brought more debt into our relationship, was spending-averse, and he helped provide a good sounding board when I got stars in my eyes about some great “THING” that was such a great deal.

  7. VERY nice post, Kelly!

    My biggest mistake has been valuing high quality products even when I couldn’t afford them. Sure, Cutco knives are a great investment, but buying them when your joint income is $40k/year before taxes might not be the best use of that income!

    I had to face some harsh realities (and stop letting salespeople into my house) before we were able to save up and buy our first house. Fortunately, I was married to a husband who, although he brought more debt into our relationship, was spending-averse, and he helped provide a good sounding board when I got stars in my eyes about some great “THING” that was such a great deal.

  12. Mistakes? Goodness, I’ve got em! Where to begin? I don’t think I could cover it in one comment!

    I used to dwell on the mistakes too. It’s so easy to do. I started applying a simple rule when I started to despair: Is this something worth having a heart attack over? The answer 99% of the time was no.

    Well life is always a trade off, isn’t it? By having a family so young, your children will be blessed with all the extra time with their grandparents. 🙂 I worry about having kids late, that they will not know their grandparents as well. But I have to roll with what life has given me, not how I wanted it to be. 🙂

  13. Mistakes? Goodness, I’ve got em! Where to begin? I don’t think I could cover it in one comment!

    I used to dwell on the mistakes too. It’s so easy to do. I started applying a simple rule when I started to despair: Is this something worth having a heart attack over? The answer 99% of the time was no.

    Well life is always a trade off, isn’t it? By having a family so young, your children will be blessed with all the extra time with their grandparents. 🙂 I worry about having kids late, that they will not know their grandparents as well. But I have to roll with what life has given me, not how I wanted it to be. 🙂

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