I figured the most useful piece of information for me right now, and for you, is to give you some insight on the pitfalls that I have experienced with money. Below you will find some typical financial mistakes (some recommended by me, some by some trusted sources), along with the pitfalls I experienced with those financial mistakes as well.
1. Not budgeting closely.
The first, and probably most important, issue when it comes to money is not budgeting closely. Setting up a budget either manually or through an online service is super important. It not only keeps your payments recorded and categorized, but it also changes the way you view spending money. Without a budget it is easy to let payments slip without keeping a close watch on your account. Just because you don’t directly see your money every time you swipe doesn’t mean it isn’t there.
My pitfall: This past week, I took a look in my checking account and cringed. For someone who wants to be an expert at budgeting, in that moment, I knew I was the complete opposite. Since February started I kept using the “it’s a new budget month” excuse and spent more than I care to admit.
2. Giving into those cultural materialistic habits.
Just because the age of millennials is leaning towards minimalism lately, that doesn’t mean the lure of materialism doesn’t exist. With the never-ending upgrades on social and digital advertising, consumers are more exposed to the “I need this” factor not just daily, but hourly. People easily fall into this habit of thinking material goods are going to give a person value, which we know is not the case. US News Money suggests to embrace experiences instead of buying more material things. For example, the picture I use above is to show an experience I chose to have on my birthday last week instead of having my friends buy me gifts. Saves all of us money, and it leaves a special memory for my birthday this year.
My pitfall: I found that following particular bloggers or pinners that post “buy this” or “you need this” type content just makes me, well, buy things. These past few weeks I have sifted through my following and decided to only follow people that inspire me with content that improves my quality of life. I still follow bloggers, and I love being on Pinterest, yet I decided to only follow people that are safe for my wallet.
3. Missing deadlines for bill payments, or forgetting bills being paid automatically.
Remember that digital newspaper subscription that you payed for a month ago? How about that Adobe Cloud membership? It’s easy to sign up for services or memberships for a simple fee, but sadly those fees add up. However, not setting automatic payments could be an issue when it comes to paying bills on time. Late fees for bills such as electricity or gas can rack up to $100 or even more depending on your property, so make sure to set alarms or automatic payments. The key is always keeping a close eye on your account and making sure you know every cent that is moving in and out of it.
My pitfall: This tip (along with many other great tips) from Forbe’s is one that rang true to my current financial situation. I admit to facing some ugly late payment fees in the past/ It’s a reality that sadly I could not work my way out of, and ended up spending much more than my original bill. The problem for me wasn’t so much the amount the bill was, but forgetting to pay it all together. I had to start setting alarms on my digital calendars to remind me.
4. Not investing in things that matter, but instead just buying the cheap things that don’t last.
Now this probably seems counterintuitive because the second pitfall is online shopping. However, sometimes investing in the things that matter means saving money long term. For example, buying good shoes or paying for that dental appointment can make all the difference. Invest in those things now, instead of having to buy numerous cheap pairs of shoes (which I bet will add up to the same amount as the expensive pair after the full duration of those quality shoes), or dealing with dental health issues down the road. Sometimes investing in the things that matter will help you towards a better budgeting goal.
My pitfall: I am the queen of purses. I always found cheap purses at Forever 21 or H&M, but after a month or two the purse would fall apart or not live up to my expectation. This past summer I finally invested in a good quality Kate Spade tote bag. It was expensive, and I did have to sell all my other purses for it. But it is the perfect bag for my every day needs, and I haven’t bought a new purse in six months (and counting).
5. Forgetting to make financial goals.
Mary Fortier, student financial services manager at Towson University, expressed to The Baltimore Sun the importance of setting short, immediate, and long term financial goals. Some of these financial goals include buying a car, saving for retirement, or planning trips. “In order to meet these goals, they need to decide how they are going to use their current income to reach these goals. And goal setting should be reviewed and reset every six months because circumstances can change.”
My pitfall: When I first started receiving a pay check, I thought that I could budget, and spend, all of it. This kind of mindset lead me to not make any goals, which now looking upon my graduation, I know that setting financial goals should be important. For example, what if I don’t work for a few months when looking for a new job? That meant I needed to start throwing money into my savings monthly.