Let’s face it, this money thing is really tough.
There are a lot of things that you’ve gotta’ do right and it’s super easy to make a mistake that sets you back months or even years.
But we’ve all done it. Every single adult on this earth has done something stupid with money…me and you included.
I’ve gone into debt twice and had to claw my way back out. I’ve used credit cards, borrowed money from family, overspent, lived paycheck to paycheck and A LOT of other dumb stuff. You probably have, too. But that’s okay. It’s why I wrote this post.
Today, we’re going to talk about the 37 most common money mistakes, why they’re ruining your finances, and how you can fix them. Like I said, we’ve all done stupid with money. But today’s the day we fix it. I’ve turned it all around. And I know you can, too!
3 reasons why it’s important to fix these money mistakes
1. They’re ruining your financial future: the bad decisions you’re making today are going to crush your finances in the future. Every decision you make is going to hurt twice as much when you’re older and look back to see how horrible of a financial decision you made. Address it today so that it won’t hit you twice as hard tomorrow.
2. They’re costing you in compound interest: every minute that you spend borrowing, spending everything you have, and not investing today is costing you in compound interest down the road. Compound interest is when your investments earn interest and when that interest earns interest year after year. Your money grows bigger and bigger the longer you’ve got it invested. And if you wait, it’s going to cost you big time.
3. they’re not letting you live your best life: these mistakes aren’t just costing you compound interest or your financial future, but your ability to build wealth, retire with some money, and live your best life from here on out. I’m not gonna’ waste an opportunity to make this time amazing. You shouldn’t either.
So if you’re making any of the mistakes below, it’s time to fix them. Let’s go!
37 common money mistakes (and how to fix them)
1. Not paying attention to your finances
This is the biggest money mistake that anybody can make. This is huge, because if you don’t pay attention to your finances, you’re bound to make hefty mistakes that are usually very hard to undo.
People that don’t pay attention to their finances simply make money, spend money, use debt to finance an inflated lifestyle, put loans and other borrowed money on the back burner, have no idea how much debt they have, and have no intention of ever figuring it out. “Worrying about money” is the last thing on your mind if this is you.
But you need to be worried. Because your debt is crushing you slowly. And you may not even realize it. Your finances are crippling you and you have no idea, because you aren’t paying attention. And like I said a few paragraphs ago, you are single-handedly ruining your financial future.
But you can change that. All you have to do is start paying attention to fix this.
2. Continuing to live paycheck to paycheck
If you’re continuing to live paycheck to paycheck, and not doing anything about it, you’re making a HUGE financial mistake.
I mean, it baffles me how people can continue living paycheck to paycheck every month for years and not go absolutely insane. After I went back into debt in 2019-2020, I found my wife and I back in this cycle. We made a certain amount of money and just barely had a few dollars left over at the end of each month. But those few dollars, maybe $20-50 dollar max, weren’t helping us make any progress.
Instead, we usually just went out to eat or bought something. We were back to living paycheck to paycheck and it hurt. After a 5-6 months of this, I had enough. I was done. We had lived like this in the past and now we were experiencing it again. So I said, “NO MORE. I’VE HAD IT!” That’s when it all started changing. We stopped living paycheck to paycheck and starting fixing our finances.
If that’s you, and you’re living paycheck to paycheck, you need to change it up and try something different. We got on Dave Ramsey’s Total Money Makeover plan and stopped living paycheck to paycheck. To fix this, and stop living paycheck to paycheck, you need to work a simple financial plan.
Check that out here on Ramseysolutions.com. I don’t make any affiliate commissions off of this product. I just endorse it because we use it and believe in it.
3. Not asking for help
If you’re in serious financial trouble, not asking for help can be a really big financial mistake. I know it’s tough sometimes to admit that you’ve failed, or that you’re having a hard time continuing on, but it’s okay to ask for help.
If you need some help fixing your finances, we’ve got you covered here on DollardollarNOW.com. Check out some of our best posts here.
We also recommend that you try out Dave Ramsey’s The Total Money Makeover program. It will help you build up confidence in your finances again. Check that link in the section above.
Either of those resources can help you fix your financial problems.
4. Not having a financial plan
Not having a financial plan is a huge problem because you don’t know where you’re going financially. If you want to fix this, find a plan that works for you. Again, we recommend Dave Ramsey’s The Total Money Makeover plan or our simple 10 step plan to get out of debt, build wealth, and bulletproof your finances.
Check that out here: “How to Stop Borrowing Money: 10 Step Guide to a Debt Free Life”
5. Not having financial goals
Financial goals are so incredibly important. If you want to achieve any financial success in your life, you need to set some goals for yourself. Make sure they’re specific and you write them down somewhere. Also, make sure you’re setting short-term and long-term goals.
If you don’t have any financial goals, the fix is simple – spend a few minutes today setting some financial goals for yourself.
For more on financial goal-setting, check out this post here on Ramseysolutions.com.
6. Not having a BIG reason WHY
If you’re trying to fix your finances, get out of debt, and start building wealth, you need to have a BIG reason WHY you’re doing all of this. For example, if you’re just trying to do better with money, that’s not a big enough reason why. You’ll eventually fall off the wagon and start making financial mistakes again.
You have to have a HUGE reason WHY you’re doing this. For example, my wife and I have a HUGE reason WHY we got out of debt and will stay out of debt: We’re sick of debt, tired of being broke and having nothing, sick of not being able to afford anything, sick of a negative net worth, my wife and I want to travel one day, we want to help our son go to college without loans, and we want to be millionaires by 40 years old. I’d say that’s a pretty big reason why.
The fix: think of a big enough reason why so that your BIG reason WHY helps you stay motivated and keeps you pushing forward with your financial goals.
7. Not having an emergency fund
It’s extremely important to have an emergency fund no matter what your financial situation looks like. If you’re in debt, scrape together a $1,000 dollar starter emergency fund. Once you’re out of debt, you’ll need a 3-6 month fully funded emergency fund. It’s going to rain, so you might as well have an umbrella ready.
You fix this mistake by making sure to have an emergency fund for when life happens.
Check out these two posts for more:
“How to Create a $1,000 Dollar Starter Emergency Fund in 1 month!”
“How to Create an Epic Emergency Fund With Any Income: 2022 Edition!”
8. Not having a budget
You NEED a budget. If you don’t use a budget for your finances, you are making a tremendous financial mistake because you aren’t controlling your money. Instead, it’s controlling you. And you’re prone to overspend and lose track of what’s in your bank account. Don’t do this and don’t waste your hard-earned dollars by not having a budget.
I recommend that everyone use the zero-based budget to track their finances. It’s easy to do and it gives every dollar you have a mission – whether saving, investing, spending, or whatever else you want to do with it.
If you don’t use a budget, fix that and create one today.
For more info, check out my post on the zero-based budget here: “7 Ways a Zero-Based Budget is the Best Budget for Your Money.”
9. Not paying off debt!
Continuing to let debt hang around your neck is a big mistake financially. Most people go into debt and just never get out. They also think that trying to invest and save while paying every month on their debts is a good idea. If this is you, it’s time to change things up.
Debt sucks. It’s robbing you of your money now and your financial future tomorrow. Don’t let debt do that. Get it paid off as fast as you can so that you can start building real wealth.
If you have a lot of debt, fix it by paying it off completely.
Check out this post on why it’s important to pay off debt first before investing: “Should I Pay Off All My Debts First Before I Start Investing?”
If you’re ready to crush your debt, check out this tips post here: “47 Creative Ways to Pay Off Debt This Year.”
10. Paying the wrong debt first
Look, if you’re paying off debt, I won’t get onto you too much. I’m just happy that you’re working on paying your debt off. But there are a lot of people in your situation that just won’t get it done because it’s overwhelming and they’re not able to get momentum with their debt. Why? It’s because you’re paying the wrong debt first.
Just randomly paying on debts isn’t going to work. And paying high-interest debts first could mean a lot of work to get the first one done. No, let’s try a different approach.
List out your debts smallest to largest, attack the smallest debt with a vengeance, and pay minimums on all the others. You gain momentum fast, you get quick wins from the smaller debts, and you get the motivation from paying them off. And with each debt you pay, you add that money into your “debt snowball” and start paying off the next biggest debt.
Don’t make this mistake. Use the process above to fix your finances and get your debts paid off as soon as possible.
For a great post on this topic, check out this one here on my site: “Highest Interest Rate vs. Smallest Balance: Which Debt to Pay First?”
11. Going back into debt (the debt cycle)
One of the biggest mistakes that I’ve ever made financially was going back into debt after I’d alright gotten out the first time. Life just kind of got in the way and we eventually financed a beautiful 2017 Toyota Highlander after my son was born. Awesome car. Horrible financial decision. It set us back a long way and it took us another year to get back out of debt.
I mean, it’s hard to get out of debt and stay out of debt. But you fix this problem by getting out of debt, having a reason why, having financial goals, and telling yourself that you’re never EVER going back into debt or borrowing money again.
12. Not investing for retirement
If you’re in debt, you need to pay off your debt first before investing. You can check out my post, “Should I Pay Off All My Debts First Before I Start Investing?” here on the site.
If you are out of debt, you’re making a HUGE mistake if you’re not investing. I know a lot of people that have a “I have a lot time before I need to do that” mindset. That is NOT okay.
You need to start investing immediately because you’re losing out on crucial compound interest. That interest, and your money, grow bigger and bigger the longer it’s invested.
So it’s very important that you fix this mistake and get started investing as soon as possible.
13. Missing out on the employer match
An employer “match” is literally free money that your employer may offer you as a benefit of employment. Whatever percentage they give is how much they will contribute as a percentage of your income. So if they match you at 5% percent, that means they will put the equivalent of 5% percent of your salary into an investment as long as you put your own 5% percent of your actual salary in. DID I MENTION THAT THIS IS FREE MONEY?
Again, if you’re in debt, pay your debt off first before investing UNLESS you’re going to lose the employer match permanently. If that’s the case, while paying off debt, invest to get the match and pay your debt off. If you won’t lose it permanently, just stop investing TEMPORARILY to get your debt paid off. Then you can start investing again and get your match.
Don’t make the mistake of not getting your employer match! Make sure you invest to get that free employer contribution money.
14. Not having insurances in place
If you’re single, you really don’t need much else other than car and health insurance.
But if you have a family, you need to make sure you have all of the proper insurances: term life insurance, disability insurance, health, and car insurance. Plus, you need to make sure you aren’t paying an arm and a leg for them.
For our insurances, we went through Zander Insurance. You can check the out here on their website. If you aren’t insured, fix that financial mistake and get insured asap!
15. Not having identity fraud protection
Now identity theft protection isn’t required, but the more your net worth grows, the more crucial it becomes. We also get our identity theft protection from Zander Insurance as well. Check them out at the link here.
If you aren’t covered by identity theft protection, fix that and get covered today.
16. Allowing “lifestyle creep”
So now that we got the basics of personal finance covered, we move into the stuff that’s harder to control. The first of those things is lifestyle creep.
Lifestyle creep happens when you start making more and more money. As you make more, you start spending more and buying more luxuries. The increase in income for a lot of people means that they have more money to spend and thus, their lifestyle starts creeping up and up. You have to avoid this.
The goal is to live off of a certain amount of money, say $4,000 dollars per month, and start using the extra money from raises to stay out of debt, invest, save, and spend.
If lifestyle creep is causing you problems, fix it by cutting expenses, trying to spend less, and lowering your lifestyle a little bit.
17. Frivolous spending
Frivolous spending is something that can absolutely crush your finances. Overspending can easily cause you to go deep into debt and lose control of your ability to save, invest, and build wealth. You have to control the person in the mirror. If you don’t, you won’t ever be able to be financially successful.
The fix: stop spending money.
If you’re still having trouble, check out this Ramseysolutions.com guide here on how to stop spending money.
18. Keeping up with the Joneses
If you have a “keeping up with the Joneses” kind of mindset, you’re making a huge financial mistake. This concept is simple. You know the Jones family: the family that has it all. Nice cars, a big house, fancy tech gadgets, and just a ton of stuff. They look happy on the outside but are gripped with financial stress on the inside. Because they can’t afford that stuff and have a ton of debt.
If you have a “keeping up with the Joneses” mindset, you probably always want that stuff or that new car that your friend or neighbor has. You want to keep up the luxury lifestyle that you see others living. But don’t make this mistake because they can’t afford to live this way forever and their house of cards will eventually collapse around them.
To fix this, you need to stop caring what other people have and what other people think of you. People don’t care if you have expensive stuff. Keep working on your finances and try to always stay frugal.
19. Not living below your means
Living above your means can really hurt you financially and is a financial mistake that a lot of people are making these days. “Living above your means” simply means that you’re spending more than you’re making. “Living below your means” is simply spending less than what you’re making and this is what you need to strive for.
Living below your means is an important financial principle and something that too many people aren’t thinking about. Most just spend and spend, and if they don’t have enough money, they supplement their income with credit cards and other debt.
To fix this, make sure that your expenses and everything you spend is less than what you make. That’s how you live below your means.
20. Having too much stuff
This next financial mistake is a result of all of the bad decisions in the last few sections. If you allow lifestyle creep, spend frivolously, try to keep up with the Joneses, and live above your means, you will end up accumulating a bunch of stuff. Stuff can be good and I want you to be able to have stuff. But I don’t want that stuff to have you. If you’re making bad financial decisions while overspending, you’ll end up with too much stuff and that’s bad.
To fix this, follow the recommendations in the previous few sections and sell your stuff. Use that money to fix your finances and go from there. From here on out, if you buy stuff, pay for it in cash.
21. Buying new cars (or leasing)
If you’re in the mindset of always buying a new vehicle when you get tired of your current vehicle, that’s a big financial mistake. New cars are expensive and lose a tremendous amount of value when you drive it off the lot. But I got a 0% percent interest loan? I’m good, right? Nope. The car company makes money from the purchase of the car. All that value that you’re losing is the profit of the car company. A 0% percent interest loan doesn’t matter.
YOU SHOULD NOT BUY A BRAND NEW CAR UNLESS YOU ARE A NET WORTH MILLIONAIRE.
To fix this “gotta’ have a new car” mindset, make sure you’re always buying 2-4 year old, quality, low-mileage used cars with cash. Never take out a car payment.
22. Buying a huge house (or renting expensive apartments)
Huge houses are awesome. But they’re often ridiculously expensive. Unless you have a huge family, you don’t need a house with 5 bedrooms or with 3 levels, a basement, a workout room, an office, and a garage. That stuff usually costs A LOT of money and people often overbuy because the bank tells them they can afford it. Don’t listen to the bank. Set a budget for yourself and stick with it.
Also, don’t rent apartments that are insanely expensive. You don’t need hotel-like amenities.
You fix this financial mistake by setting a budget and only borrowing the amount of money that you can afford – the 15-year fixed rate mortgage shouldn’t be more than 25% percent of your monthly take home pay. For rent, no more than 25% of your take home pay.
23. Buying a house when you can’t afford it
If you’re deep in debt, buying a house is a gigantic financial mistake. I’m not against anybody getting a house, but I am against people buying a house when they’re struggling with debt and affording everything that they owe. Because paying for a house and all of the expenses that come with it is VERY EXPENSIVE.
You need to get out of debt and save up a down payment before you get a house. And even then, it needs to be reasonable purchase.
To fix this, make sure that you follow the guidelines as we set above: get out of debt, save up a down payment of at least 10% percent, then only get a mortgage you can afford – a 15-year fixed rate mortgage with a payment of no more than 25% of your take home pay.
24. Getting a 30-year mortgage
Getting a 30-year mortgage can be a gigantic financial mistake because you’re going to pay significantly more money to the bank in interest over 30 years as opposed to other, shorter mortgage periods. And it could end up being into the hundreds of thousands of dollars extra. When I refinanced my mortgage from a 30-year to a 15-year mortgage, it stated that I was going to save over $100,000 dollars in interest. That was mindblowing.
Also, banks normally don’t give you as good of a rate for a 30-year mortgage, compared to a 15-year mortgage, so you’ll end up paying even more money in interest on top of that.
To fix this – If you have a 30-year mortgage, refinance to a 15-year if you can or just pay your mortgage like a 15-year. If you haven’t gotten a house yet, just go for the 15-year fixed-rate mortgage with a payment of no more than 25% percent of your take home pay.
25. The home equity scam
If you’ve already fallen for the home equity loan or line of credit, you’ve been scammed by your bank. THIS IS A 2ND MORTGAGE. it’s a horrible product that lets you borrow on the equity of your house and then charges you interest on top of that. NEVER get a home equity loan or anything of the like.
If you have a home equity loan or line of credit, pay it off as soon as you can. Fix this issue by paying it off and never borrowing against your home again.
26. Not investing for your kids’ college
The next couple of things on this list are things you need to be doing if you have kids. If you don’t have kids, skip to #29.
Now, if you have debt, you need to pay off debt first before you invest for your kids’ college. After that, if you can’t afford to do this and invest, you need to be investing for your retirement. Because you are going to retire. That’s a guarantee. But it’s not guaranteed that your child will go to college.
However, it is a big financial mistake if you don’t save or invest anything for your kids’ college. Because college is expensive and it’s going to hurt when they get there and have no money. If you can’t afford anything else, try to at least invest $50 or $100 dollars per month into a College 529 Plan. We started with $100 per month and should have around $80,000 dollars or more by the time my son is 18 years old.
To fix this: open up a College 529 Savings Plan that invests in good growth stock mutual funds with a long track record of success.
27. You don’t teach your kids about money
If you aren’t teaching your kids about money, this can be a huge financial mistake for not just you, but for your kids as well. Because kids watch everything you do. And if you have terrible financial habits, they see that. A few will see how bad your habits are and turn the other direction. Most kids, however, will follow your lead and end up being horrible with money, too.
So to fix this, you need to first fix your own finances. Only then can you show AND teach your kids how to manage money properly.
28. Paying too much for kids toys or clothes
If you’re a parent, you already know how expensive kids clothes are. I mean, those little people cost the same amount to clothe as us big people, but grow out of it all twice as fast!
So me and my wife have decided to buy everything for our son at either goodwill, kids consignment shops, or from other parents who are selling. Brand new clothes are just unnecessary when kids are young, so why buy everything new? Just buy decent, gently used clothes that look fine and do the job. Plus, you’ll be saving 50-75% percent off the original tag price so that you can use more of your money for debt, saving, investing, spending or other fun.
If you spend too much on kids clothes, just stop. Hit up thrift shops, consignment shops, or parents who are selling kids clothes to save that money!
29. Playing the credit card reward point game
If you’re sucked into the credit card reward point game, it’s time to start looking at things a little differently. Credit cards suck as it is and trying to get a few points by spending a lot of money on a credit card is just flat out dumb.
Most people aren’t really earning money anyway, since interest costs more. And for those who are “churning” credit cards and making a few dollars off of them, that’s a lot of effort to only make a few dollars.
To fix this, stop using your credit cards and cut them up. You don’t need a credit score anyway.
30. Thinking a credit score really matters
If you’re obsessed with a credit score, you’ve got to change your mindset on credit cards. I elaborated on why they suck for credit card reward points in the last section, but let’s talk about the actual credit score.
You might think you need a credit score for everything you do in your life. Most people have been taught to believe that lie. But here’s the thing – IT’S A LIE. You don’t need a credit score to buy a home, rent an apartment, get utilities, get a phone plan, or any of those other things you’ve been told.
To fix this, fix your finances, live below your means, pay cash for stuff, cut up your credit cards, and make sure you have a decent work history (so all of those places that use a credit score can just very your work history instead).
For more on why I hate credit cards, check out this post: “ 37 Reasons Why Credit Cards are Bad (and Ruining Your Life!)”
31. Not saving up for stuff
If you’re trying to get out of debt and stay out of debt, you have to save up for expensive purchases like vehicles and household appliances. They are extremely expensive and most people will go into debt when purchasing something like this because, well, they have no money saved.
To fix this, start a sinking fund for future large purchases and make sure you’re contributing every single month.
For more on sinking funds, check out this post here on Ramseysolutions.com.
32. Streaming and subscriptions
Streaming and monthly subscriptions can be awesome, but having too many of them can be a strain on your finances. Most people by now have cut the cord on cable. This is a great way to save, too. But they have replaced that savings with 10-15+ plus streaming and subscription services. $4.99-9.99 doesn’t seem like a lot until you have a bunch of these services all charging you every month. That can amount to $100 dollars or more in charges every month.
To fix this, cut some of these monthly subscriptions out and only keep a few of them.
For more ways to save money, check out this epic post: “101 Ways of Creatively Cutting Expenses to Save a Ton of Money”
33. Eating out too much
Eating out too often is another thing that can be costing you a lot of money. Some spend hundreds of dollars per month just because they don’t want to get groceries and cook. I’ll admit that I like to eat out a little too much, but I’ve learned to control myself.
The fix – give yourself a budget for fast food every month, go buy some groceries, and learn how to cook.
For more ways to cut expenses on your food and grocery budget, check out this post: “47 Tips and Tricks for Saving Money at the Grocery Store”
34. Paying full price for everything
As far as spending goes, if you always buy everything at full price, that’s a HUGE financial mistake. Yes, there are a few things that you have to inevitably buy at full price. But for almost everything in your life, there’s a way to get it on sale or at a discount: from gas to clothes to groceries and so much more. For every discount you find, that’s a little bit of money saved that can go toward your financial goals!
To fix this, always try to find a discount, sale, or other way to save. Make saving on whatever you’re buying a goal. And always challenge yourself to save something off a purchase. I have saved thousands of dollars in my life by doing all of this.
35. Keeping the same dead end job for your whole career
Don’t stay in a job that sucks. Or a job that isn’t getting you anywhere. Why would you do that? Scared? Not confident enough? Grow your confidence. If you need a new job, go find one!
For this, I recommend two great books:
From Paycheck to Purpose by Ken Coleman – get it here (not an affiliate link)
The Proximity Principle by Ken Coleman – get it here (not an affiliate link)
If your job sucks, fix it by getting a new one.
36. You lend money to friends and family
Here’s a mistake that I don’t want you to ever make again. That is lending money to friends and family. It’s a horrible idea and is bound to cause a rift in your relationship with that person. All it takes is someone not being able to pay that “debt” and so begins the small crack in that relationship. A few missed calls and an awkward meeting later and you find that the friendship or family bond is broken.
I lost a good friend over a few hundred dollars and I’ve never forgotten that. I tried forgiving the money but he was too ashamed to hang out and soon moved away.
You fix this by never EVER lending money to ANYBODY. If I give money, it’s a gift that never has to be repaid. If you have lent money, forgive it and move on.
37. Not paying yourself first
Whether it’s saving, paying off debt, or investing, making sure to “pay yourself first” is one of the most profound financial principles of all time. This simply means that you take care of your saving, investing, or debt first before bills or spending. That mindset takes care to help you further your financial goals while promoting a more frugal lifestyle on whatever is left over.
How do you fix this? Pay yourself first (before the bills come out).
The great investor Warren Buffett said it best: “don’t save what is left after spending, spend what is left after saving.”
So if this is you
We’ve all been there. It’s too easy to make financial mistakes and it’s incredibly hard to fix them. But you’re here and it’s time to fix everything that you’ve messed up or done wrong so that you can get your debt paid off, make better financial decisions, and build real wealth. Are you ready for that? Good, ‘cause here we go!
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