Pattie Lovett-Reid: Money mistakes you should aim to avoid
We can be savvy in so many ways in our lives. Yet when it comes to having our money work as hard for us as we did for it, we all sometimes come up short.
If you’re honest with yourself, you likely know you’re making money mistakes and you wish you could reverse them. I’m not going to tell you to give up your daily lattes, but I am going to give you advice on how to set yourself up for success.
Here are the top 10 money mistakes you’re likely making (but shouldn’t):
1. Letting cash sit idle: Cash sitting idly in your savings account earns next to nothing, and when you factor in taxes and inflation, you are probably paying your financial institution to hold your money. Develop an investment strategy today. Procrastination will destroy your wealth plan.
2. Falling in love with your assets: You are stretched to the limit, yet you love your home and refuse to sell and downsize to something more manageable. It’s time to accept you are living beyond your means.
3. Abdicating financial responsibility to someone else: Don't do it. No one will care more about your financial future than you. Take control of your financial situation. Set some goals that get you excited. Develop a plan and then respect yourself enough to stick to the plan.
4. Overdoing it: No one wants you to save until it hurts or spend as if there is no tomorrow – find a balance.
5. Paying off credit card minimums: Making the minimum payment on your credit card will keep your credit rating in check, but destroy your balance sheet. Time and compounding works for you when you’re saving money, but it works against you when you owe money.
6. Relying on your memory: Automate your way to financial success. Set up preauthorized payment plans so money comes directly out of your account and applied directly to debt, retirement savings or into your investment portfolio. Automation takes timing and temptation out of the equation.
7. Believing you already got the lowest price: Be aggressive about cutting costs, look for ways to earn more money and optimize your spending. Make a few phone calls to negotiate lower rates on all your contractual obligations. You might be surprised at how much you will save.
8. Ignoring free money: Review your workplace benefits package. I'm willing to bet you are leaving money on the table by not fully taking advantage of benefits you are entitled to. A line-by-line review of benefits might make you realize that taking advantage of all of your benefits is the equivalent of giving yourself a raise.
9. Ignoring what you’re worth: Compile your net worth statement annually. Confront your brutal financial facts. Unless you can clearly see how much you owe and how much you own you will never make the necessary changes to experience financial freedom.
10. Leaving money for tomorrow: If you are retired, you do get to spend. Enjoy your life because if you don't, your heirs will.
I challenge you to do one thing differently today that will change your financial trajectory tomorrow.
You know the adage – it is truly only a mistake if you do it twice. But I hope that by sharing some of the lessons I’ve learned along the way, you don’t have to fall into the trap of making these mistakes even once.