When you’re young and getting settled in your career, it can be easy to get your priorities confused. Some people will not take advantage of opportunities that could make them rich later in life. Others will focus too much on how much they’re earning when they should have been more concerned about the things that truly mattered.
In this post, we’ll explore ten of the biggest money mistakes that you’ll come to regret later in life, and what you can do now to avoid them.
1. Getting Serious About Your Finances Too Late
There’s a big misconception by many people that you don’t have to worry about saving for retirement until you’re in your 40s and 50s. But the truth is that the earlier you start, the easier it will be to prepare.
This is largely due to the compound interest effect. Compound interest is when money grows on top of both the money you contribute plus any previous earnings you’ve accumulated so far.
When you start saving for retirement too late in life, compound interest won’t have enough time to build upon itself. You’ll either have to save more aggressively than your peers or wait to retire until you’re better prepared. The best thing you can do is to start saving as much as you can beginning right now.
2. Trying to Keep Up with the Joneses
Wanting to have a bigger house, newer car, or a better “anything” is okay, but not when it’s because you’re afraid of what other people might think of you. Under those conditions, you might be suffering from a phenomenon called “Keeping up with the Joneses”.
The problem with this mindset is that it never ends. You can spend your entire life savings, get into some serious debt, and drive yourself crazy always trying to outdo everyone you know.
A better approach is to stop caring what other people think of you and your stuff. Start spending your money the way you want to and in a way that adds value to your life.
3. Not Being Prepared for an Emergency
There have been many cases where people with good jobs have become financially devastated within a matter of minutes. This is usually the result of an unexpected injury or accident that leaves them unable to work or make costly repairs.
The best things you can do to protect yourself are to have adequate insurance policies in place and build up an emergency fund. Emergency funds are typically 3 to 6 months’ worth of living expenses that have been set aside in cash.
4. Putting Your Faith in Others Before Yourself
It’s perfectly natural to trust your friends and believe those closest to you have your best intentions in mind. However, this is also how many people get duped into scams or held back when a golden opportunity comes knocking.
The number one person who should be advocating for you is “you”. Be hungry to get more out of life and be skeptical when other people approach you claiming to offer help. When something doesn’t feel right, trust your gut and walk away – even if it’s a friend or family member.
5. Mortgaging Your Health for Your Career
There’s a reason why so many middle-aged people are overweight, unhappy, and full of health problems. When you work long hours, have little physical activity, and carry the stress of multiple responsibilities, it starts to take a toll.
Though some people think this is the way towards advancing their careers, proceed with caution. It’s true that sometimes you may need to work a little harder or do a little extra to get that raise or promotion you seek. But it shouldn’t be at the cost of upsetting your work-life balance.
Do the smart thing by exercising regularly and checking in with your doctor at least once per year. And if things start to get too stressful at work, consider that it may be time for a change.
6. Taking Your Spouse for Granted
Whether you’re married or simply living with your significant other, it’s so easy to assume that they’ll always be there. But at the same time, this familiarity can make you become complacent or even take out your frustrations on them for things that have nothing to do with them.
Not only are problems between couples bad for one another mentally, but they can also take a major toll financially. Ask anyone who’s been divorced and they’ll tell you that losing half of everything they’ve ever owned was one of the worst experiences of their lives.
Remember – the two of you are a team. Always try to support one another no matter what the problem may be.
7. Not Savoring Time with Your Children
If you’re a parent, then the time you have with your children is much more limited than you might realize. Children are only small and impressionable for a short number of years, so it’s really important that you do everything you can do to be an integral part of their lives.
Again, this is especially important while you’re starting your career. Don’t make the mistake of missing birthday parties and sporting events just so that you can make one more sale or potentially land a promotion. Those are special times that you’ll never get back.
8. Never Allowing Yourself to Take a Chance
Are you afraid of going back to college to get a degree because you might be in debt? Or that investing in the stock market is too risky?
These are all things that can change your life for the better, but they do require somewhat of a leap of faith. Push past the year of all the bad things that might happen and remind yourself about all the good things you’ll be missing out on by not taking action.
9. Thinking That More Stuff Will Make You Happy
Retail therapy can be a strong emotion for some people. Buying that new purse or car can make you feel ecstatic for a moment. But then it doesn’t take long for those feelings to disappear.
True happiness comes from finding things you can do either by yourself or with people you enjoy. The sooner you figure out what these things are, the less money you’ll waste buying things you probably didn’t even need.
10. Not Realizing How Simple Money Really Is
At its core, money comes down to two things:
- How much you earn
- How much you spend
Lots of people spend their lives overly complicated this basic relationship. But the secret is that as long as you spend less than you earn, you’re going to be okay.
That’s why it’s so important to budget and track your expenses. If you’re not doing this already, then try using an app like Buxfer. Buxfer connects to over 20,000 different financial institutions and consolidates all your transactions into real-time reports so that you’ll always know how your finances are doing.
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