Top 5 Common Spending Mistakes And How To Fix Them
Common money mistakes can hinder our achievement of financial stability. Usually, these mistakes are small, daily habits that we practice every day, yet we don’t necessarily pay them a lot of attention. They’re small, yes, and can even seem insignificant, but they can still have a huge, negative impact on our finances, our quality of life, and create stress in the long run.
When it comes to achieving financial stability, identifying our spending mistakes is a crucial step to help us improve our finances and thus reduce financial stress.
The key is to identify our spending mistakes and then implement simple and practical strategies to fix them. These fixing habits are all easy and practical so that we can incorporate them into our daily lives without too much struggle or effort and will help us correct our spending habits so they don’t add more financial stress to our lives.
So let’s take a look at these common mistakes and how to fix them.
Top 5 common spending mistakes and how to fix them
1. Spending more than you earn
You spend more than you earn. It is an obvious mistake, but a very common one because sometimes when you’re not careful, this happens very easily and without you even noticing that you’re doing it.
The Fix:
Fortunately, this is easily fixed. Simply list down all your income from all your money sources and then make sure your spending doesn’t cross this number and remain under this financial ceiling. Also, always prioritize essential expenses and needs, before you turn to non-essential expenses and wants.
2. Not keeping track of your spendings
You’re not keeping track of your spendings. With small and numerous purchases, you can easily lose track of how much you’re spending if you’re not careful, and then they all add up quickly and can end up impacting your whole budget negatively.
The Fix:
Well, this is an easy one too. Start to track your spendings in any way that works best for you. Note down every single one of your purchases, even the smallest, most insignificant one. You can use paper, a notebook, or even a budgeting app if you prefer to use technology. Whatever works best for you.
3. Purchasing right away
You make your purchases right away without giving yourself a waiting period to really consider your thoughts and feelings, and costs and impacts. Usually, this comes from impulse buying, which often is a common contributor to spending problems.
The Fix:
Give yourself a waiting period. From a couple of days to maybe a month, give yourself the time to sit on it and really consider all the different aspects of your purchase. And see if you still want it when you get back to it, or if it was only a fleeting and unnecessary desire.
4. Not having a budget
Not having a budget can make it hard to manage your finances as optimally as you could. A budget is a great tool to help you gain a proper assessment of your finances. It gives a clear plan. Without one, it becomes easy to lose track of everything and you end up spending more than you should, or in the wrong areas.
The Fix:
Create your budget. Like in step one, list down all your sources of income, and then approach your finances and spending while keeping this list and number in mind. Allocate a specific amount to different areas like priorities (essentials and needs), then to non-essential and wants. (Do not forget to allocate a percentage of your income to savings!)
5. Overindulging
Overindulgence is rarely your friend, and it goes for finances too. Treating yourself once in a while is great, but treating yourself all the time leads to overspending, overconsuming, clutter, and waste (of time and space too), especially if you purchase more than you need, what you don’t need, or simply too much.
The Fix:
Try to practice mindful spending. Prioritize mindfulness over mindlessness. Before you make a purchase, really take the time to assess its necessity, its future costs and impact, and its long-term value.
This doesn’t mean you never or shouldn’t treat yourself. On the contrary, because you become more intentional and aware of the value of your purchases, the times you treat yourselves, the joy you’ll get from it will be amplified.
See: Mindful Spending in 5 Simple Steps
+1. Using only cards instead of cash
Cards make it super easy to overspend your money without realizing it. If you only use card transactions instead of cash, you don’t have a visual of how much you have and how much you spend.
The Fix:
Don’t rely only on card transactions and try to use cash sometimes, especially for non-essential purchases. Maybe try to allocate a specific amount of cash and then don’t spend more than this. Cash will give you a visual of how much money you have, and how much of it you spend, which can make it easier to be mindful and intentional when you actually make a purchase.
Bottom line
Remember, the small things you do in your daily life have the biggest impact. And fixing a problem relies on identifying the cause(s) and then fixing them with small actions.
Managing finances can be a struggle that comes with financial stress. However, if you take the time to assess your spending habits, this will help you identify your the small things you do that have a negative impact, and then fix them, it should resolve, or at least improve, your personal finances, and helps reduce financial stress.
So this is it.
If you have any other tips or tricks that could help with spending mistakes, please do not hesitate to share them in the comments below.