20 Money Mistakes Everyone Makes But No One Talks About

Do you talk with your family, friends or neighbors about money? It seems to be the one topic that is taboo and isn’t discussed, yet we all make money mistakes and can help others not make the same ones. A 2013 study shows that Americans would rather talk about anything than money, including death, religion or politics. Because of this secretiveness, most people really aren’t as financially savvy as they could or should be. And they make a lot of mistakes because of it.

Wise Bread has an article about money mistakes we blindly walk into, because we don’t learn about them from others. The list of twenty they came up with are:

1. Counting on Social Security. The Social Security trust fund is always in chaos. Don’t count on it being there when it’s time for you to retire. Plan accordingly.
2. Going Poor From a College Education. While it’s true that you earn more over your lifetime with a college degree, ballooning education costs have made college a financial risk. Try to cut education costs where possible. Work while going to school, find scholarships, or go to a less expensive college. $100,000 in student loans for a degree that earns you $50,000 doesn’t make much sense.
3. Being Ignorant About Home Loans. People are often confused about home loans, and trusting the expertise of the wrong people can cost you. The biggest question to ask is, “Does this make financial sense?” For some people it doesn’t and they may be better off renting. Do your research and know the difference between fixed and adjustable rate mortgages, and what is required for a down payment.
4. Overspending on Housing. Conventional financial wisdom used to say not to spend more than 25% of your paycheck on housing, though in more recent times some say 1/3. Which is unachievable in expensive cities. Get what you can afford, it doesn’t have to be a showplace. And if you are buying a house, don’t forget that 25% includes the FULL payment amount, including principal, interest, property taxes and private mortgage insurance (PMI). Not just the cost of the house itself.
5. Not Understanding the Scope of Your Debt. A recent study showed that while people have a good grip on how much they owe on their houses and cars, they are often incorrect about what they owe on credit cards and student loans. Be honest with yourself about your debt, and pay it off as fast as you can.
6. Being Financially Unfaithful to Your Spouse. Fidelity did a couples study that discovered that while 72% of couples say they communicate very well on financial matters, 43% couldn’t correctly identify how much their partner earns. Another survey shows that one in three admits to financially deceiving their partner. It’s hard to build a marriage based on trust when you are financially deceptive.
7. Forgetting About the Children. Parents in every tax bracket have a hard time talking about money with their children, which can have lifelong repercussions.
8. Forgetting to Budget. A Gallup poll shows that only 32% of Americans prepare a monthly detailed household budget. That means everyone else is winging it. It’s impossible to make good financial decisions when you don’t know where your money is going.
9. Not Saving an Emergency Fund. We’ve discussed this many times in previous articles. It’s impossible to stay out of debt if you have to borrow money for every little emergency. Start with $1000 in an emergency fund, use the debt snowball to pay off your debt, then add more to the emergency fund.
10. Financing Major Purchases by Debt. If you can’t buy it with cash, you can’t afford it. Save up money each paycheck and buy it when you can pay for it up front.
11. Buying New. Buy used when you can, especially cars. The author of the Wise Bread article is a huge proponent of it. She said that “buying used goods is one of the ways I managed to save over $30,000 in less than eight years.”
12. Relying on One Source of Income. From the article: “Even salaried workers with benefits can increase their financial stability by taking outside work. In shaky economic times, it literally pays not to put all your financial eggs in one basket.”
13. Underestimating Tax Bills. This is especially important if your income varies widely from year to year or if you are an independent contractor. Review your tax returns from previous years to get a better idea of what you will owe this year.
14. Failing to Negotiate Prices. Do price comparisons. Big-box and department stores will usually match competitors’ prices. Also, if you are paying cash it never hurts to ask if they will give you a discount.
15. Overspending on Gifts. Many people seek help from consumer counseling services in January and February because they overspent on Christmas. Save money monthly for gifts. And don’t spend more on gifts than you can really afford.
16. Screwing Up Your Perks. Use gift cards or coupons before they expire. Same with rewards programs. People miss out on thousands of dollars in merchandise and services by not using them.
17. Falling Victim to Rewards Credit Cards. Rewards credit cards often have higher interest rates than non-rewards cards. If you don’t pay it off every month then you will lose any rewards savings to interest payments. Also, people tend to spend more the closer they get to the reward, buying things they don’t need.
18. Not Continuing Your Education. It’s important to stay up on current information in your job field. It can lead to promotions, greater negotiating power, and the ability to change careers. Subscribe to industry journals, look at newest information on the internet, or take continuing education courses at your local college.
19. Missing Out on Food Stamps, Unemployment, and Other Benefits. Many people who qualify for food assistance don’t apply for it. Mainly this is due to lack of information about eligibility. That extra help can free up money for you to put toward your debt.
20. Not Seeking Out a Financial Mentor. Even if you are money-savvy you can benefit from an outside opinion. Find someone who can help you stick to your financial goals. Seek out a person, books, or online websites that give you help and encouragement.

For the full article from Wise Bread, click here.