11 Money Mistakes We Make In Our Lives

Last month, our 19-year-old daughter made what I regard as a money mistake. She traded in her old, dysfunctional, hand-me-down iPhone 6S for an iPhone XS Max. The iPhone 6S was her first phone. It was handed down to her by her uncle 5 years ago when my daughter was 14.

She had been saving for a new phone for 9 months. All along, she insisted that she could not buy any other phone apart from an iPhone. The rest of the family and I tried in vain to convince her to buy an Android phone.

We told her that buying an iPhone could be a money mistake that she might regret later. Firstly, an Android phone is much cheaper than an iPhone. In addition, since she had just joined the university, the chances of the iPhone getting lost or stolen quickly were high.

Our pleas fell on deaf ears. She insisted on buying an iPhone. She said that buying an Android phone after having an iPhone was like moving from grace to grass.

So, she brought out her savings – $300. She confirmed that she could get about $45 after trading in her old iPhone 6S. So, she had about $345. She needed about $550 to buy the new iPhone.

To make a long story short, we did a mini-fundraising (her dad, her two brothers, and I) to raise the rest of the money. Each of us raised about $50. The girl bought her new iPhone, and she was thrilled.

Last week, I received a distress call from my daughter. She was using her friend’s phone, and she was crying uncontrollably. She told me that her new iPhone was stolen.

It was exactly a month after she’d bought it (story for another day). As I talked to her and tried to empathize, I couldn’t help thinking, “What a waste, what a money mistake”!

Due to my daughter’s money mistake, today I want to talk to you about the money mistakes we make in our lives. This post is to help you make wise financial decisions from today onward.

11 Money Mistakes We Make In Our Lives

The money mistakes you make as you navigate through life are numerous. You see, you can make money mistakes at any stage of your life – young, middle age, senior citizen, etc. Let’s look at the money mistakes we make in our lives without further ado.

1. Spending Your Hard-Earned Money Unwisely To Impress Others

Do you sometimes behave like my teenage daughter? She made a money mistake because she didn’t want to lower her standards. She was most probably thinking of what her friends would think if she suddenly switched from an iPhone to an Android phone. So, she spent money that she didn’t have to impress people.

As if that was not enough, the phone was stolen within a month. It was stolen because an iPhone is like a hot cake to thieves. Although we tried to reason with her, she ignored our pleas to reconsider her decision.

She could have used the $550 she spent on buying the iPhone to buy a good Android phone and a laptop. Now, she doesn’t have a phone or a laptop. We have to go back to the drawing board.

2. The Money Mistake Of Living Beyond Your Means

This money mistake can affect people of all ages but is more common in people in their 20s and 30s. Some people believe that you only live once (YOLO). If you have this mentality, you could end up making the money mistake of spending more than you earn.

Here are things that you do that make you spend more than you earn:

• You constantly buy expensive makeup, wigs, and perfumes
• You buy the latest gadgets
• You buy the latest clothes
• You spend a lot of money on partying
• You spend loads of cash traveling to different destinations for fun
• You buy a posh car that guzzles instead of saving fuel

At the end of the day, you find that you are living beyond your means. It’s okay to enjoy life, but spending more than you earn is a money mistake.

You could end up taking loans to finance your YOLO lifestyle. If you are not careful, you could end up miserable and in debt.

So, enjoy life but live within your means.

3. Not Starting To Save Early Enough For Your Retirement

This is a money mistake that many self-employed people make. You see, when you are young, you feel very young and healthy. You aren’t worried about saving for retirement because you think it’s far away.

You know what? Years fly by and one day you will retire. So, instead of spending your cash to impress others or adapting a YOLO lifestyle, start saving for your retirement.

Suppose you start saving for retirement in your 20s. In that case, you’ll have saved good money to retire peacefully.

It’s good to note that it’s never too early or too late to start saving for your retirement. Start today if you haven’t started already.

4. Not Creating A Reliable Income Stream To Fund Your Retirement

This is a common money mistake that affects some people after retirement. Once you retire, it’s important to create a reliable income stream to fund you in retirement. If you don’t do so, you could suffer financially in your old age and this could lead to stress and premature death.

For instance, when your employer pays you a lump-sum after retirement, avoid putting the money in your bank account. If you do so, the money can be finished within a short time.

It’s better to create a reliable income stream to fund your retirement. The best thing is to create an income stream that can give you a reliable monthly income for the next 30 years. You hope to live a long life, right?

Here are some things you can do to create a reliable income stream to fund your retirement:

Save in money market funds (MMFs): Saving your money in a money market fund is better than saving in a bank. These funds are secure as they are run by the government or reputable insurers. They also offer you a higher return on investments than traditional savings accounts.

Buy a retirement annuity: If you have a lump sum amount of money upon retirement, you can purchase a retirement annuity. You pay the lump sum in exchange for a guaranteed monthly income for the rest of your life.

5. The Money Mistake Of Overspending On Your Children

If you’re a parent, you can most probably do almost anything for your children. After all, you want them to be happy and have the best that life can offer. You have no qualms about doing the following for your dear children:

• Taking them to the best and most expensive schools.
• Buying for them the latest toys, clothes, and shoes.
• Buying for them the latest gadgets.

Giving your children the best is a great thing. However, if doing so makes you live beyond your means or prevents you from saving for retirement, it’s best to go back to the drawing board.

My opinion is that your children can still excel in that school whose school fees you can afford. So, avoid overspending on school fees.

In addition, children can look good in simple clothes and have fun with basic toys.

They’ll be just fine if you provide their basic needs and shower them with love.

6. Accumulating Too Much Credit Card Debt

Having a credit card is great. It helps you to access services and funds when the need arises. However, if you’re not careful, you can accumulate too much credit card debt.

Below are things that can make you accumulate too much credit card debt:

• Living beyond your means
• Buying things on impulse
• Spending too much on your children
• Spending money to impress others

The problem of accumulating too much credit card debt is that it could ruin you financially. You see, credit card debts attract very high-interest rates. The high-interest rates can drain you financially. In fact, huge credit card debts can haunt you for years.

In addition, unpaid credit card debts can ruin your credit score. This could worsen your financial woes.

So, avoid making the money mistake of accumulating too much credit card debt. You can do so by spending wisely.

7. Money Mistake Of Overspending On Renovating Your Home

This is a money mistake that some homeowners make. In the spirit of living life to the fullest, you may want to improve your living space by renovating your home.

Renovating your home is awesome as it makes the home beautiful. In addition, renovating your home increases its market value.

However, if you are not careful, you could end up overspending on home renovations. Suppose you overspend on home renovations. In that case, you can put a strain on your finances for years to come.

In addition, you could be forced to use money in your retirement savings to pay for some of the additional costs of the home renovations. This can affect your life after retirement.

Here’s how you can avoid overspending on renovating your home:

Identify what you want to achieve with the renovations

Do you want to change the tiles, install a new ceiling, or paint part/whole house? It’s good to identify what you want to achieve with the home renovations so that you can budget.

Draw a budget for the renovations

After listing what you want to achieve, draw a budget. You can hire a construction professional to draw the budget. The professional knows the cost of materials, labor, etc.

Set aside money for the renovations

I’m sure by the time you decide to renovate your home, you already have some savings. So, set aside the money for the renovations from your savings. Remember to allocate money for miscellaneous expenditures in your budget.

Try to stick to the budget

When doing home renovations, there might be unexpected expenses. However, to avoid making the mistake of overspending on renovations, it’s best to try to stick to the budget as much as possible. You can use the miscellaneous allocation in your budget to pay for unexpected expenses.

8. Investing Money You Can’t Afford To Lose

Another money mistake you can make today is investing money you can’t afford to lose. You see, one of the ways people try to make money today is by doing online trading. This is where you invest money in the hope of making a profit.

Some examples of ways you can trade online include the following:

• Forex trading
• Trading in shares
• Trading in cryptocurrency

Today, there is a craze about online trading. If you decide to trade online, remember that the market can be volatile. That means that you could make a profit if the market favors you. On the flip side, you could make a loss or even lose all your money if the market doesn’t favor you.

So, before you invest your money in online trading, it’s best to invest money you can afford to lose. In other words, invest money that will not affect your finances greatly if you lose it.

I have heard of people who have invested their pension benefits in online trading and lost everything. Please avoid making such a serious money mistake. Only invest money you can afford to lose.

9. Not Saving For A Rainy Day

Do you know that you can be asset-rich, but cash-poor? This is a situation where you own assets worth thousands or millions of dollars but you don’t have cash to pay for an emergency. This happens because you haven’t been saving for a rainy day.

Not saving for a rainy day is a common money mistake. Saving for a rainy day gives you peace of mind – you know you have money to cater for any emergencies that may occur.

You can use the money you’ve saved for a rainy day to do the following:

• Repair the boiler if it suddenly blows up.
• Replace a tire if it blows out suddenly.
• Repair the roof if suddenly starts leaking.

Suppose you’ve not saved for a rainy day. In that case, you may have to borrow money from friends, relatives, or from your credit card. This puts you in debt and is not good for you.

10. The Money Mistake Of Supporting Adult Children

This is a money mistake that some people in their 40s and 50s make. At this age, if you have kids, they’re most probably grown up. Interestingly, more adult children remain at home nowadays than they did some years ago.

If you are not careful, you could be tempted to support your adult children. Suppose you support your adult children. In that case, you can affect your finances greatly.

So, if any of your adult children are still living with you, it’s best to set some ground rules regarding finances.

For instance, you could tell them to do the following:

• Pay some rent – after all, they are living in your house.
• Chip in on the utility bills.
• Chip in on the food.

I know you love your children regardless of their age and you can do anything to make them happy. However, avoid being too kind.

By laying some ground rules regarding finances, you ease your financial burden greatly. In addition, you help your children to be responsible and independent people.

11. Not Planning For Your Medical Needs

This article would not be complete without mentioning the money mistake of not planning for your medical needs. You see, you’re prone to fall sick every now and then. If you don’t plan for your medical needs, you could end up spending a lot of money on health care.

Expenditure on your medical needs can escalate as you get older because your immune system continues to decline. In addition, people are more prone to lifestyle diseases as they grow older.

So, take a health insurance cover as it keeps your medical expenses low. Remember it’s very expensive to pay for your health care from your pocket. Some people have become destitute due to heavy financial bills.

Conclusion

Making money mistakes in the course of your life is quite normal. However, knowledge is power! I hope these tips about the money mistakes we make in our lives will help you make wise financial decisions from today onward.

NB: My daughter is trying to recover her phone using the, “Find My iPhone App”. There has been some progress. We’re keeping our fingers crossed.

So, have you made any small or big financial mistakes in your life? Kindly share your experience and thoughts below. Cheers!

Also read: 10 Tips On How To Look Good On A Tight Budget; Become a Woman of Elegance