There are a number of things you cannot afford at the moment and spending mistakes are one of them.
There has always been some form of economic hurdles people had to go over. It can be changed in economic policies to the recession and now, the health crisis. This means that we will always have challenges that will put our finances to the test. With that as a given, we can choose to hole up and wish for it to go away or learn from it to be smarter money managers.
One thing you need to understand is that no one is perfect. This opens us to making mistakes along the way. What matters is what you do after making a mistake. OF course, this is not a blanket statement that forgives you for mistakes you make. Spending mistakes can be avoided and especially at this time, you need to be more cautious.
This is because the pandemic has left a lot of people out of a job. It has also forced most businesses to drastically make budget adjustments in order to survive. Your income might not be the same but your expenses are still recurring. This just makes it a lot more challenging to bounce back up from money mistakes you make.
But it is not an impossible task. It also helps that AP News shares that spending was on a decline due to the health crisis. This situation can only magnify the mistakes you make. One way to avoid these is to learn from other people’s past errors in judgment. This can help you see the problem and what the potential solution can be.
Spending Mistakes to learn from
Here are some of the mistakes you could learn from and help you strengthen your money management skills. You could also be going through some of them at the moment and acknowledging the problem is the first step in solving it as well.
Hiding spending from family
You need to know that your family can help you get through your situation. But they wouldn’t be able to do that if you start keeping things from them. This is true especially if you are married. You should never hide any financial details from your partner. Even before tying the knot, you should have a financial talk to know all that you are bringing into the marriage. This is important as USA Today shares that about 44% of US adults admit to hiding financial details from their partners.
You could be having problems with overspending and you are trying to hide it from your spouse. How long will you be able to keep that from them? The bills will come and your accounts will become smaller by the month. Sooner or later, they will figure out something is wrong and they will talk to you about it. It is better to have that talk as early as possible.
One benefit this brings is that you get to think of how you can both solve the problem. This drastically improves your chances of getting through the problem. As a family, you can all pitch in and do your part in trying to lower down expenses around the house. This gives you a better chance of managing your budget until you financially recover from your mistakes.
One of the biggest spending mistakes people make and one that you need to avoid is impulsive buying. These are instances where you go on a buying spree without thinking about the consequences. Normally when you make a purchase, there has to be a valid reason for it. Much more now that you have to justify every expense because times are tough. You also need to purchase based on your budget.
Impulsive buying is a behavior where you buy simply because you want to. Or so you think. This is because it may seem random but there is actually an underlying trigger for this. It is something deeply embedded in your character that you need to peel down to and understand. You could be buying expensive things because you were not able to do that when you were younger. It could also be your way of coping with extreme emotions.
One approach you can do is to address the main problem. Accept that you have a problem and find someone you trust to talk to about it. The more you face the problem, the lesser of a hold it has on you. This can help get to the bottom of the problem and address the real problem and not just the symptoms of the root cause.
Relying on Credit Cards
Heavy reliance on credit cards can lead to a number of spending mistakes if you are not careful. The primary reason is that you can spend as much as your credit limit will allow. It is also a lot easier to purchase with your credit card because you only either need to swipe it, tap it, or put a series of numbers on your device for the payment to go through.
You need to understand that your credit cards are not to blame. Much like your bills, they are just a tool. You are still the one using it and it is up to you to use it to your advantage. There are people who use their credit cards to improve their finances. They could be using each card for a specific purpose or taking advantage of discounts, rebates, or even reward points from their cards.
There is nothing wrong with using your credit cards. It can even help you improve how you budget your finances at home. The real question is how you use them. If you consistently use your card to make unnecessary and out-of-budget expenses, then you will be in debt pretty soon. Be sure that you use your credit cards properly.
Prioritizing Non-Essentials Items
One of the biggest spending mistakes you could be making is not prioritizing how you use your budget at home. This is crucial especially when you are trying to make ends meet. You have to prioritize your spending with your basic necessities on top of the list. This can include food, house payment, utilities, and even medication.
All other non-essential can be bumped down your list. This helps you to quickly identify what you can take out to save money. Remember that there will be times when you need to strip down your expenses to its core. If you have a list that already prioritizes your expenses, this exercise will go a lot smoother.
Quantity over Quality
There is a fine line between being frugal and being cheap and it can affect your budget in the long run. This has a lot to do with balancing quantity versus quality. You might think that the least expensive option is always the best choice when going out to buy what you need. It seems to the logical choice when saving money but you need to think about the quality as well. Take an appliance for example – you might need to replace your broken down fridge. Now there are a lot of brands out there and the first thing you look at is the price. That is a given but you should not only base your purchase on that. Think about the quality and even the after-sales for the item you’re buying. You might end up buying another one in a few months because you chose to buy a cheap brand rather than a quality unit that costs a little more but will last longer.
You need to address spending mistakes as soon a possible so it does not blow out of proportion. If you take it at the moment it happens, there is a good chance it is still manageable and you can solve it quickly.