Even “smart” people can sometimes have financial habits that zap their financial plans and can leave them with an empty wallet. That’s why you need to know what financial mistakes might be costing you extra money today, tomorrow, and, well, every day when you stop paying careful attention to it.
Being financially careless is dumb and knowing you are and continuing along that road is even dumber! Do as the old saying goes and “Just say no!”, but this time say no to dumb financial behavior.
I have to really restrain myself here because honestly there are just so many behaviors that trigger financial dumbness. Here are just twelve of the (possibly 1,000+) financial mistakes that are really dumb, so get to recognize them right now and make sure you aren’t starring in the next Jim Carrey remake of that classic comedy. It just isn’t so funny when your money is the star!
12 Dumb Financial Mistakes to Avoid
1. Stop paying careless bank fees
Almost all banking fees can be avoided, so there’s no reason to pay them if you don’t have to. Instead, find a new financial institution that will allow you to avoid fees more easily and just plain be smarter and more careful about your banking habits.
2. Start checking your credit report now
People with top-tier credit ratings qualify for the lowest finance rates when car or home shopping. On a mortgage, over a 30-year term, just a quarter of a percentage point can add up to many thousands of dollars. Check your credit history regularly and clean up any problems you find as soon as they arise. Even a “mistaken” entry can ruin your credit rating and cost you real money. Get a free credit report with daily updates from WalletHub.
3. Rein in your dining out
Going out for lunch every day? A survey by Visa found that the average American spends about $25 per week on eating out for lunch. Over a year, that adds up to well over $1,000. No need to waste money on lunches out when a brown bag lunch is cheaper and, if packed correctly, can be even more nutritious.
What about dining out for dinner? Doing it every weekend or, even worse, 3 or 5 nights a week? Restaurants are expensive. Cut back and certainly skip on things like wine and alcohol or consider a BYOB-friendly restaurant whenever you are dining out and you will save big time.
4. Stop opening new store credit cards
Retail stores are notorious for offering a discount on an initial purchase if you sign up for the store card. Although that 10% or 20% discount might sound sweet when you’re standing at the checkout line, signing up is far from a good idea. It’s a fact that most customers will not pay off the card and they will make up the discount and more in high interest payments.
5. Stop carrying your credit card debt
Even now when interest rates are at all-time lows, double-digit credit card interest rates are the norm. That means that people who carry a balance are taking a serious hit to their wealth. Making only the minimum payments means paying high interest for years to come. Get your credit card debt paid off as quickly as possible. Once that is complete, direct that money into a savings or investment vehicle and start amassing real wealth.
6. Stop smoking cigarettes
Thirty-four million Americans still smoke cigarettes, according to the Centers for Disease Control and Prevention. A pack of smokes costs between $5 and $13, depending on where you live. At half a pack a day, that’s anywhere between $200,000 and $600,000 over the course of 40 years. Talk about “burning” your money! Switching to vaping is likely to save you money, but it’s still money you don’t need to spend. Give up this habit and save your money and your health.
7. Stop falling for the bait-and-switch
Ever bring a sale item to the cash register only to find it’s not the one actually on sale? Avoid the bait-and-switch by saying “no” to items that don’t turn out to be the exact one you came in to buy on sale by asking for the item or an upgrade! Never just “settle” and always know what you are actually getting for your money.
8. Stop buying groceries without a list
People who shop without a list can easily fall prey to grocery shopping “creep”, the phenomenon that happens when you add “just one more thing” to your cart several times per trip. You probably don’t need chocolate-covered pretzels or frozen waffles. Having an effective list keeps you from running afoul of your spending plan and spending more than anticipated.
9. Stop making impulse purchases
Adding a pack of gum to your shopping cart at the grocery store checkout might not seem like a big deal, but habitual impulse shopping is. Even online retailers have added new tricks to entice you to return to your abandoned digital shopping cart such as by emailing you reminders and promotional offers and making it easier than ever to make purchases, like offering free in-store pickup. Those unplanned expenses will ruin your well-planned budget.
10. Letting FOMO get the better of you
Fear of missing out, a.k.a. FOMO, can cause you to spend money unnecessarily. Turn off your social media so that you don’t always cave into FOMO because it’s a dangerous habit that convinces you that you’re always missing out and that you need to participate in everything! It’s a false narrative that spells nothing but “dumb” financial waste.
11. Stop “window shopping” and torturing yourself
There is some real wisdom to the line of thought that if you don’t see it, you won’t want it. Avoid window shopping (whether literal or digital) and you’ll spend less. Studies show that “need to have” pops into our heads whenever we window shop. Save the browsing and the “sale emails” for when you’ve planned a purchase.
12. Stop ignoring expected needs ahead of you
A lot of spending is due to poor last-minute decisions like when you’re going somewhere and you forget to bring a bottle of water or a snack and then have to splurge on it. Or if you forget your umbrella and get stuck in the rain and have to buy one in an emergency purchase. How about when you are running late and have to park in a premium spot? Or is it a bigger problem, like knowing Christmas is 77 days away, but you haven’t saved up for gifts?
Add those kinds of unexpected purchases up, and you might just blow your budget! If you plan ahead and simply remove or avoid the temptations, you’re much more likely to spend less.
There are probably 1,000 ways you can sabotage your budget and act out a starring role in the financial version of “Dumb and Dumber”. I keep finding new financial mistakes all the time, but if I write about them all today, right now, I’d be writing it for the next month and that would be just, well, “dumb”.
The bottom line is this: If you don’t try to stick to smart ways to maintain a budget or plan, it can and will always backfire on you. A smart plan is a roadmap. Yes, you can allow just a little bit of wiggle room but never enough for a wiggle to become a full blown hurricane of dumbness.
More to come on this topic, I can assure you.
Do you realize it too late when you make dumb financial mistakes? Why do you think it’s so hard to control and what can you do to change your behavior(s) right now?