Just 20 years ago, if you wanted to find advice on money, investing, or retirement planning, you had a trip to the library in your future. You’d go through the card catalog, find a few books on your selected subject and hope you had all the information you needed. My how things have changed. Today we’re living in the era of information and we have the unique ability to find the answer to almost any question or find virtually unlimited advice on almost any subject. Yet, we don’t always take the advice we uncover and end up making a money mistake.
“We know too much and are convinced of too little.” –T.S. Elliot
As it turns out, even smart people fail to take good advice and make serious money mistakes. We all like to think we’re pretty sharp, we clip coupons, comparison shop, and make regular contributions to our retirement, but there are some serious mistakes we should avoid.
Money Mistake #1. We fail to discuss money issues with our spouse or significant other. People traveling through life together owe it to themselves and each other to discuss money issues before they fester and balloon into something that interferes with their relationship. One person shouldn’t have to shoulder all the family’s financial burdens alone.
Money Mistake #2. We sweat the small stuff and neglect the big stuff. We clip coupons but then drive halfway across town to redeem them. We drive out of our way to save two pennies per gallon on fuel and we only needed 12 gallons (24 cents savings). We buy a new lawn tractor so we won’t have to pay the neighbor’s kid to cut the grass. Does any of this make sense? We need to look up and remember our larger goals!
Money Mistake #3. We don’t check our credit report very often. Since we can get one free every 12 months at www.annualcreditreport.com, we can get one from each of the three credit bureaus every four months.
Money Mistake #4. We fail to budget. When we don’t tell our money where to go, our money rules itself. It tells US what it’s going to do and it almost never makes the right decision.
Money Mistake #5. We don’t educate ourselves. Whether we read financial blogs, books, magazines, or take classes, continually educating ourselves is never a mistake. Ideas are wonderful motivators. We get new ideas from new information … information that’s new to us.
Money Mistake #6. We let our wallets leak. Examining our expenses on an annual basis is one sure way to put things in perspective. What’s the annual cost of that daily candy bar, that daily lunch, that car wash? When you decide to put a plan into action, save the money! Try reading 17 Sneaky Savings Strategies.
Money Mistake #7. We fail to plan for known upcoming major expenses and as a result we plan our financial disasters. We know our annual car insurance premium will come due eventually. We know we’re going to need new tires in about 18 months. We know we’ll have to pay for summer camp for the kids. Failing to plan is planning to fail! Set aside the money on a monthly basis in a savings account and you’ll be ready when the bill comes due.
Money Mistake #8. We chase returns and wind up getting scammed. Yeah, I’ve been scammed a few times too. We all want to think we have found “the secret” or have a rich guru that has some type of previously unrevealed knowledge, or some chart that will help us make a fortune. The guru is lying and that knowledge doesn’t exist. If it did, no one would be able to keep it a secret. Hint: read How A Second Grader Beats Wall Street and put those ideas into practice.
Yes, even the smartest people can make HUGE mistakes. What other money mistakes to smart people make?