Many people struggle with money. Though a difficult economy and sociocultural factors may be to blame, you can still do your part to try to make smart choices with your money. Here, we’ll take a look at some of the most common financial mistakes that can lead people to economic hardship.
Key Takeaways
- Avoiding common mistakes during economic challenges can make a big impact on your financial health.
- Small, regular expenses can affect financial stability, especially during hardships.
- Overspending on housing leads to higher taxes and maintenance, straining monthly budgets.
- Over-relying on credit cards and financing depreciating assets can worsen financial woes.
1. Unnecessary Spending
It may not seem like a big deal when you pick up that double-mocha cappuccino or have dinner out or order that pay-per-view movie, but every little item adds up. Just $25 per week spent on dining out costs you $1,300 per year, which could potentially go toward credit cards or other payments, if you have debt. If you’re enduring financial hardship, avoiding this mistake really matters.
That said, the key word here is “unnecessary.” That’s subjective. Maybe you really look forward to or need those cappuccinos or dinners or movies to maintain your mental wellness. A healthy financial life can include all of that. This type of spending just needs to be part of your budget. If you plan for it, and you can afford it, then enjoy it.
The number of adults who said their finances were worse compared to a year earlier was 35%, the Federal Reserve’s 2022 Survey of Household Economics and Decisionmaking report found. 35% — basically 1 in 3—is the highest ever since the study began in 2012.1
2. Never-Ending Payments
Ask yourself if you really need items that keep you paying every month, year after year. Consider things like streaming services and high-end gym memberships. Are these needs or wants? A cheaper gym may get the job done, allowing you to save the difference.
