We all make mistakes sometimes, and making mistakes with money comes high on many people’s lists. So let’s look at the 11 most common personal management mistakes people make so that we can all try to avoid them.
Money Master The Game
by Tony Robbins
⏱ 14 minutes reading time
🎧 Audio version available
Not having a budget
You need to know how much money is coming in each month and how much money goes out on expenses such as bills, rent, mortgage, and other miscellaneous spending. So start keeping a record of your finances so you can see exactly where you are with your money and what you are spending it on. Without a budget, it is impossible to keep control of your finances.
Using a credit card for everyday spending
If you use a credit card for everyday spending, it quickly sets up a cycle of debt if you are not careful. Credit cards charge a massive interest rate on each use, and although it can be convenient and fun to splash out when you can’t afford it, you should not use your credit card unless you can pay the balance off each month. If you can’t control your credit card spending, leave your card at home or cut it up!
Avoid spending money on impulse buys and stuff you don’t need
Do you need that new dress or yet another pair of shoes? Do you need a new car when your old one works just fine? Spending money on things we don’t need is something we all do, but this is a sure-fire way of running through your cash. Always take time to consider if your purchase is necessary, and if it isn’t, don’t do it.
Getting behind on bills
This is a major no-no when it comes to your finances. If you let bills pile up, they will turn into more expensive bills, and often you will incur late charges too. If you are behind with your bills, contact the suppliers as soon as possible. Often they will waive the late payments if they know you are having problems. Once this happens, make paying late bills your priority.
Not tracking your spending
Often we spend money on contracts and services we might not need, but because these are debited from your bank account, they can pile up without you realizing they are even there.
Tracking your spending helps keep you in control. So your mobile contract, streaming services, and other small amounts such as charity payments could be leaking from your account without you realizing it. These small payments add up, so cutting back will help you keep your finances under control.
Borrowing money
Borrowing from friends and family might seem like a quick solution but will only cause problems later. Unless you are in an emergency, avoid borrowing money. Your friends and family will lose respect for you, even if you pay them back. If you don’t pay them back, it will cause a bad feeling and give you an untrustworthy reputation.
Don’t leave your job unless you have a new job to go to
Hate your job? Your work? Your colleagues or your daily commute? It can be tempting to walk out, and it may feel great for a couple of hours, but you should never do this if you don’t have a new position to go to next.
Instead, start looking for a new job. Even a job with a pay cut keeps you in employment and avoids those nasty gaps in your employment history that may be difficult to explain to your next employer.
If you are fed up with the pressures of your work, you may need some time off, so see if you can take some leave. Many people have walked out of paid employment only to realize too late that what they needed was a break.
Create some goals and set up a savings plan
It would be best to have a plan in mind; otherwise, you have nothing to aim for. Once you have created some goals, it gives you a focus on saving money. Homeownership, saving for a retirement plan, starting a new business – all these plans require money, and if you don’t have a plan in place and start saving for it, you will never move on from your position now.
Always save for a rainy day
Even if you haven’t figured out your life plan, getting into the saving habit is crucial. An emergency fund cushions you if something goes wrong. It gives you the security that your fund can tide you over for a while if something happens, such as losing your job. Even if you cannot afford to save much, even small regular amounts that you cannot touch will soon add up.
Adjust your lifestyle if your income is reduced
It can be hard to face a reduction in lifestyle if your income suddenly goes down. However, the smart move is to make income as soon as possible rather than run into debt to maintain a lifestyle you can no longer afford. Doing this may feel depressing but remember that it is far easier to bounce back up if you haven’t racked up debt in the meantime. So go through your budget and cut as much expenditure as you can. Many people find this a good lesson as it makes them more careful in the future.
Live within your means
This may seem boring in today’s consumer society but living within your means keeps you in control of your finances. Avoid getting drawn into spending money to keep up with high-spending friends, and saving up for major purchases is always better than buying them now and paying for them later. If you can’t afford expensive purchases now, there are no guarantees that you will be in a better financial position later.
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