Avoid these 10 Costly Personal Finance Mistakes

Is quite easy to find plenty of financial advice on the Internet about how to save money, spend less, increase your retirement savings and so forth, but it’s rare to hear about the common mistakes that people make that actually hurt their finances. The fact is, so many of us spend time planning what to do with our money that we actually forget that we need to hang onto money that we already have.

It’s with that in mind that we have put together this list of 10 costly personal-finance mistakes that consumers make on a fairly regular basis. Avoid these mistakes and you’ll be able to more easily keep your financial house in order. Enjoy.

Not taking care of your personal health. Medical bills are one of the top cited reasons for many peoples financial problems. Annual checkups, regular visits to the Dentist, eating properly and getting enough sleep and exercise are vital to staying healthy and, consequently, saving a TON of money on health care bills.
Not properly diversifying your investments. If you have all of your money tied to a single investment, property or stock, you run the risk of being ruined financially if your investment suddenly takes a nosedive in value or gets wiped out completely.
Signing contracts without reading the fine print. Whether it’s a gym membership or the mortgage agreement on your new home, unless you read every line, have it reviewed by a lawyer and know exactly what you’re getting into, you run the risk of signing up for something that can ruin you financially.
Getting into expensive hobbies. Let’s say that you have just purchased a new boat or a pony for your daughter. While you may have had enough for the initial purchase, are you sure that you will have enough money for the continued maintenance and upkeep? Many people find that they don’t and quickly get into hot water financially. (Horses eat a LOT of food and boats need a TON of upkeep. Just fyi.)
Not having enough insurance. Accidents and emergencies come up in every person’s life. Whether it’s a health related accident, a home emergency like flooding or something of the like, if you don’t have enough insurance you may find yourself quickly ruined financially. The fact is, very few people can predict when bad things will happen and, if you don’t have insurance, those bad things can be financially disastrous.
Cosigning a loan is another mistake that many people make and, unless you can trust the person who’s alone your cosigning 100% (and really, who can you trust that much?), it may be best to not sign at all. Remember, as a cosigner with the responsibility to pay the loan amount rests firmly on your shoulders. If they don’t pay, YOU will need to.
Abusing your home equity. Many people habitually refinance their home and use the cash to pay for all sorts of things, many of them quite frivolous. This is a financial disaster waiting to happen and, even if you’re able to pay everything back, you’re going to be paying a whole lot more for your home by the time you’re done.
Purchasing a home that’s much too big for your needs. Here’s the thing; a bigger house means bigger maintenance costs, bigger energy bills and higher taxes. It’s also much harder to sell a larger house than a smaller one especially during a recession. Our advice; go as small as you can to be happy and comfortable.
Spending more money than you make is a mistake that many people make. Unless you have a budget that shows you exactly how much money is coming in and, more importantly, going out, you are setting yourself up for financial failure. If you spend more than you make there’s absolutely no way you will ever be able to save for, well, anything.
Not saving enough money for retirement or starting your retirement savings too late. When you’re young it can seem that retirement is a very long time away but, believe us, it comes more quickly than you realize. (unfortunately.) Unless you start putting money aside early (something that will allow you to take advantage of the incredible power of compound interest) it can be extremely difficult to catch up and put aside enough to see you through your ‘golden years’.

If you haven’t made any of these financial mistakes, good for you. The fact is however that, if you haven’t, you’re part of only 5% of consumers who are financial geniuses. (And we hate you.) (Just kidding.) If you have made one or more of these mistakes now is the time to stop making them and right your financial ship. If you have any questions about personal finance of any kind, please let us know and we’ll get back to you ASAP.