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Making mistakes is the only way that we can ever truly progress. When it comes to our hard earned money though, you’ll likely want to avoid making mistakes simply because they are so costly. Many people all over the world make the same mistakes everyday. It seems as though there is a common pattern. Here are five of the most common money mistakes that you should try and avoid, especially early on in your career.
Getting a Useless Degree
This is an extremely common mistake that I’ve seen several of my friends make. It is such a common and easy mistake to make because it is virtually impossible to make a sensible decision about what career you want or what you should study when you are 18. School is incredibly expensive, you want to be able to get a job with your degree after you graduate. It’s also costly in the sense that you could be out working and saving instead of studying and spending.
Find a field of study that you are passionate, and make sure there is a job market for it before you spend tens of thousands on your education.
Our society is addicted to impulse spending. Three bucks here, three hundred there, it adds up over time. Clever marketing tactics and a vast increase in the number of products available today have aided this trend, as has an increase in surplus cash in many consumer’s budgets.
The best way to escape this psychological and financial trap is to put a ’30 day buffer’ on all your non-essential purchases. Instead of just buying the new iPhone the second it hits the market, take 30 days and really think about whether or not that expenditure would really be a positive thing in your life.
Expensive Vacations / Holidays
Everyman and his dog nowadays seems to be going on long haul vacations to Australia, America and Thailand. Not as a one-off, or for a honeymoon, but all the time. Take the time to research what great holidays you can go on locally. Pretty much every developed country has some great destinations. If you travel within your country and save the international trips for very rare special occasions, you will save yourself literally thousands of dollars per year. Do your research and plan a trip that will be both entertaining and frugal.
Leaving a Balance on your credit card
This one has always baffled me. People earn great money, but still overspend and live beyond their means and put large balances on their credit cards and take out loans to get expensive cars that they don’t really need. Remember that however much money you make, you’ll always want more, and do not fall into the trap of leaving a balance on your credit card to buy items that you do not really need. If you leave a balance on your cards it will just keep growing as interest is tacked on, try to avoid that unnecessary expense at all costs.
Investing Without Knowledge
This mistake is made both by those who invest in the stock market or in private business ventures. There have been countless stories in the media over the years about people losing fortunes on the stock market. Unless you are willing to spend months researching what exactly it is all about; the risks and the rewards, it probably is smarter to invest in mutual funds or something similar than trying to pick your own investments. And before you invest in a business venture, it is essential to plan and research your niche thoroughly. What is the demand for your business? Who will you have to compete with? Can you compete with the ‘big players’ in your market? Who is and where are your target market?
If you can avoid making all of those big money mistakes in your life, you will be well on your way to living modestly and building real wealth!
Author Bio: James Petzke is the blogger behind This Is Common Cents, and is a currently a college student studying business economics.