A recent issue of Good Housekeeping reviewed Common Money Mistakes. I ended up skimming the article, mainly because I felt like these were tips I had read again and again, and obviously I was already following all these tips. But then I decided to take a closer look.
Mistake #1. My Money is Disappearing
Well, I’m guilty of this. I know where my money goes, because I track it in categories. I just can’t always say exactly what I spent the money on. I have been thinking about carefully tracking where my grocery budget goes. I may start that in October, as I’ve already done a major shop in September and I’m not sure that I still have that receipt. I try to use a credit card for everything so that I’m not frittering away cash without realizing where it goes, which has done wonders for keeping money from disappearing. Still, those little expenses add up.
Mistake #2. I’m Throwing Away Cash
This mistake is in regards to your 401(k). I am contributing up to the max employer match, so I’m not throwing away money there. I am not contributing the maximum amount allowed by law, however. I just don’t have the excess funds right now. That money goes to bills and building my savings. I’m content to contribute to the max and fully fund my Roth IRA for now.
Mistake #3. My Kid’s Budget Runneth Over
This one’s easy. No kids. But something to keep in mind for all you parents.
Mistake #4. I Never Saw a Windfall I Couldn’t Spend
I think I have to plead guilty on this one. Or at least partially guilty. I spent most of my stimulus check. I don’t feel like I wasted it, but I definitely didn’t put all of it into savings. When I got a tiny raise in January, I didn’t increase my savings at all. A few months ago, my state changed the way they calculated taxes, so my paychecks increased by a few dollars. Again, no change in my savings. I am expecting to get another tiny raise in the next month or so, probably not more than $50 a month after taxes, but I should make it a point to save that money.
Gifts, on the other hand… those are almost always spent automatically. We’re not talking incredibly huge gifts, of course, but I know I took my birthday money to the mall this year to buy some new items for my wardrobe. I suppose buying clothes for work is important, and I don’t buy clothes often, but I could be saving half of my gift money and spending the other half.
Mistake #5. I Forget What I’m Worth
This mistake is in regards to life insurance. I don’t have a spouse or kids or anyone relying on my income (other than my cats). I do have life insurance, however. It was one of those things I could have opted out of when I started my job (I did not know this), but it turns out that if you opt out, it’s tough to get back in later. So I’m content to pay the small amount every two weeks and know that I’ve got one thing checked of the “list of important things to do.” (Though I should probably add in “Figure out details of life insurance policy.”)
So how’d you do on this list?
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.