Five Costly Mistakes That Make You Financially Irresponsible

When you were a kid, you might’ve developed this rose-colored worldview that adults live in a bubble, buying everything they want and get away with it. As you grow up, you learn all the responsibilities that they have. You learn that money just doesn’t grow on trees; Santa Claus definitely didn’t get you that toy you always wanted.

Of course, one day, you learn how to be financially responsible. You learn to save up and value money. However, you might not notice that you’ve already made an error along the way. The top money-saving tips will always tell you to avoid these budgeting mistakes.

Confusing self-care with excessive self-indulgence

Self-care is important. After all your hard work, you deserve to treat yourself, to unwind. However, your hard work may all be for nothing if you just go on a bad shopping binge. You don’t have to be self-indulgent to relax; you can spend your money wisely. Frivolous spending is the death of your savings account and the impetus for bad credit scores.

Ignoring your credit score

Speaking of bad credit scores, how’s yours? If you don’t take care of your credit score, you’ll be locked out from better interest rates and down payment offers. You might also be rejected for loans, credits, and mortgages, or you might be asked to pay a fee or a deposit first when applying for credit. Credit scores are incredibly difficult to improve but very easy to worsen, so be careful where you swipe your card.

Putting your emergency fund in your savings account

Your savings account isn’t the best place to put your emergency fund into. If you’re wont to spend too much, then you might accidentally use the money you’re saving for emergencies. There are a lot of places where you can put your emergency fund. You can open up a new savings account for it. Many banks allow for opening sub-saving accounts where you can put your emergency money or auto loan payments or what have you.

Not having a retirement plan

Regardless of whether you’re just about to enter the workforce or you’re almost 40, not having a retirement plan is one of the worst things you can do for yourself. A 2019 Northwestern Mutual research found that 22% of adult Americans aren’t financially prepared for retirement, having saved less than $5000 for their fund. Forty percent of Americans are already facing retirement poverty in America, according to Schwartz Center for Economic Policy Analysis, with only their social security or a part-time job keeping themselves afloat. Try to save up as much as you can for the future—including for your retirement.

Disregarding your coins

Letting some people keep the change may not lead you to financial ruin, but think of all the money you’ve saved up if you just have gotten your change. You can cash in those spare change from the farthest reaches of your couch and the ones in your bag over at coin exchangers, such as Coinstar, and have it converted into a gift card. Or if you still have old silver coins, you can sell them to collectors or “junk silver” buyers. That’s a little less weight in your pockets and a little more value into your wallet.

To err is human. But as long as you remember to avoid these mistakes, you’ll also avoid the headaches and any lost opportunities. Be financially smart.