This morning I was contemplating some of the money mistakes I’ve made in the past and the common monetary mistakes people seem to make every day… there are probably too many to count, but these are the few that jumped into my head immediately:
Spending money before you have it
Nearly everyone has done it… you’re told you are getting a bonus at work or that your tax refund will be larger than expected, or you might even be expecting to inherit some money – whatever the scenario, you’re going to receive a windfall… so you loosen the purse strings a little and spend some money while in your head you attribute the expense to that future cash.
Even if your accounting is perfect and you don’t overspend by even a dime, you still face the fickle nature of the future, and things don’t always happen as planned. Spending money you don’t yet have always has the potential to cause problems. Maybe your parents don’t leave you as much money as you thought they might, or the Christmas bonus has been cut from the budget at work this year; even if it’s something that seems like a sure thing (like a tax return or next month’s paycheck) everyone who is spending money they don’t actually have has a tendency to overspend, sometimes by a large margin. Did you accidentally assign that money to one or two purchase too many? Once the cash arrives it’s already gone and you’ve spent additional money you didn’t plan to spend, or spent money you didn’t have at all and started racking up credit card debt.
Blowing the budget because you deserve it
Sometimes one partner in a relationship has to be the bad guy, the frugal police, setting a budget and negotiating rules for spending money and saving with their partner. The reluctant partner likes to spend, and despite agreeing to a budget and knowing the reasoning behind the savings goals, they decide to make purchases because “[they] deserve it.”
I’ve also seen this scenario play out inside the head of one person – they have goals and know what needs to happen to reach them, but they use this excuse to break their own rules and spend money they really shouldn’t on indulgences and purchases that their alter-ego would be angry about.
Of course everyone can indulge in a treat every now and then, and when you work hard and save well, spending a little money can be a good reward to keep going. Unfortunately, most people who use this excuse seem to use it all too often, and to the complete detriment of their goals.
Planning to cook at home to save, but overspending and not following through
Everyone hears about the wonderful possibilities of reducing your expenses by cooking meals at home, and people often try and kick-start this new and beneficial habit by rushing out to the store and spending too much money on an unplanned pantry full of food to prepare for themselves. Some of these people succeed and start a new and successful habit of saving money by smart planning and cheap home cooking, but many fail.
Cooking at home is a skill and a habit that tends to take a bit of practice and is easier to pick up a little at a time. Making a rash decision to start immediately often ends with overwhelm, frustration, high grocery costs, bad planning, spoiled ingredients, wasted leftovers, and continued visits to restaurants & Whole Foods.
The lessons learned from each of these typical failures are great: frugal living and monetary success often require patience, careful planning, the ability to keep long term goals in sight, and a willingness to live more simply than dictated by the societal norms. Breaking old habits and forming new skills is a process, and after a while you will hopefully look back and shake your head at some of the obvious money mistakes you made in the past. What are the classic blunders that you’ve fallen for, or that you notice in your friends and family? Let me know in the comments.