5 Common Money Mistakes
And How To Avoid Them!
We’ve all made mistakes with our money, and that’s okay! But sharing is caring, so let’s dive into five common money mistakes to avoid and some practical solutions to get you back on track towards financial success.
Mistake 1: Ignoring the Power of Budgeting
One of the biggest mistakes that adults make is failing to create a budget. We both are guilty of this one! Without a budget, it's SO easy to overspend, rack up debt, and lose sight of your financial goals.
The fix? Start by tracking your income and expenses, then allocate your money towards essentials like rent and groceries, savings goals, and discretionary spending. Use budgeting apps or spreadsheets to help you stay organized and accountable.
If you’re not sure where to start, check out our free course on the basics of money management where we walk you through how to create your first budget.
Or, if you don’t need as much guidance, download our free Simple Budget Tracker here to get started.
Mistake 2: Not Saving for Emergencies
Life is full of unexpected twists and turns, and having an emergency fund is crucial for weathering financial storms. Yet, many adults don’t prioritize saving for emergencies. You should aim to set aside at least three to six months' worth of living expenses in a high-yield savings account. Start small if you have to, but you should make saving for emergencies a non-negotiable part of your long-term financial plan.
If you don’t already have an Emergency Fund, we created this super simple Emergency Fund Tracker that will can you get started.
Mistake 3: Relying Too Heavily on Credit Cards
Credit cards can be a convenient tool for building credit and earning rewards, but they can also lead to debt if used irresponsibly. Avoid the temptation to overspend or carry a balance on your credit cards. Instead, use them strategically for purchases you can afford to pay off in full each month. If you're already in credit card debt, create a plan to pay it off as quickly as possible, starting with the highest-interest debt first.
If you want to learn more about tips to pay off credit card debt, we cover this in our free course too!
Mistake 4: Not Investing for the Future
Investing may seem daunting, especially for young adults just starting out in their careers, but it's essential for building long-term wealth. Don't make the mistake of waiting too long to start investing. If it’s available, take advantage of your employer-sponsored retirement plans to begin investing. When it comes to investing, the earlier you start, the more free money you’ll earn over time in interest. The key is to invest consistently (even just $20/week) for as many years as possible.
Mistake 5: Failing to Plan for Retirement
And continuing on the mistake above, retirement may seem like a distant dream when you're in your 20s, but it's never too early to start planning for your golden years. Avoid the mistake of neglecting your retirement savings and having to work well into your 60s or 70s just to pay the bills. Contribute as much as you can afford to your employer-sponsored retirement plan if your employer matches your contributions, and consider opening additional investment accounts like a TFSA or RRSP in Canada or an IRA or Roth IRA in the US. The power of compound interest means that the sooner you start saving for retirement, the better off you'll be in the long run.
By prioritizing budgeting, saving for emergencies, using credit cards responsibly, investing for the future, and planning for retirement, you're well on your way to achieving your financial goals. These are the foundations for setting yourself up for success now and in the future!
About The Authors
Amanda and Siobhan found a shared passion for personal finance shortly after completing their MBAs in 2018. Amanda excelled as a Director of Product in the tech industry, while Siobhan established herself as a leader in e-commerce before transitioning to academia as a Professor.
In 2020, they joined forces to found Hiver Academy, a platform born from their own experiences and triumphs in conquering student loans and building wealth. Realizing that financial success is within reach once the complexities are simplified, their mission now revolves around empowering individuals to achieve financial freedom.
With a wealth of knowledge and a commitment to demystifying money and investing, Amanda and Siobhan are dedicated to helping others navigate the path to success.
