Most of us didn’t learn how to manage money in school, but it’s never too late to start. In this post, we’ll explore some common money mistakes that can set you back and harm your financial future. If you’re ready to take charge, make smarter decisions, and future-proof your finances, keep reading.

1. Not Having a Budget

I get it, budgeting isn’t exactly fun, but it’s the most reliable way to keep track of and manage your spending, and that’s just the truth. It’s easy to dream about not having to budget, imagining a life where you make so much money that it’s unnecessary, but that’s not the reality (at least, not yet). Even if you reach that point, consider this: the most successful businesses in the world stick to budgets, the company you work for has a Finance team dedicated to managing its budget, and even your favourite celebrities hire professionals to manage theirs. Sure, their budgets might be in the millions while yours are more modest, but the principle remains the same. We’ve all seen what happens when budgets are neglected or mismanaged, companies go under, celebrities go broke, and debt becomes inevitable. Don’t let that become your reality, and if it already is, don’t worry, introducing a budget might just be the key to turning things around.

2. Lifestyle Inflation

So you’re earning more than you were before and feel it’s time to upgrade your life, new car, new clothes, and whatever else brings you joy or instant gratification. But what happens to the extra money you’re bringing in? Does it simply disappear into additional spending, instead of being used to pay off debts, save toward your goals faster, or invest to grow your wealth? There’s a clear opportunity here to make a smarter choice. Treating yourself is absolutely fine, you deserve it, but not if it comes at the cost of securing your financial future.

3. Keeping Up With the Joneses

The only competition you should focus on is past you vs future you, so why waste energy worrying about what others do or don’t have with their money? Especially when you don’t truly know their earnings or personal financial situation. Don’t let someone else’s choices influence your financial decisions, make decisions based on where you are now and where you want to go financially. Remember, if you end up in debt trying to keep up with the Joneses, they won’t be there to help you out. Prioritise your financial health and stay focused on your own journey.

4. Prioritising Wants Over Needs

This is where a budget becomes invaluable. It allows you to clearly outline your necessities and essentials, as well as your extras (the discretionary spending you could go without but have chosen to indulge in). Prioritising wants over needs is a guaranteed way to jeopardise your financial future, often leading to overspending. When you buy what you want first without considering how much to allocate for your needs, you may end up scrambling to cover the difference using credit cards or overdrafts. The good news is that this can be easily avoided by prioritising your needs, including savings, before your wants. Once those are covered, you can enjoy your fun money guilt-free.

5. Taking On Debt

As if credit cards and overdrafts weren’t enough, buy now, pay later (BNPL) services have surged in popularity. These services thrive on our desire for instant gratification, but the cost of convenience is often steep, paying interest on top of the original price means you end up spending more than if you had simply saved for the purchase. Don’t fall into this trap. Paying more for items you could have planned for and bought at a lower price doesn’t benefit your financial future. If you can afford monthly payments through a BNPL service, you could just as easily save that same amount and make the purchase in one go, interest-free.

6. Bank Loyalty

This might be an unpopular tip, but sticking with your current bank and not exploring better savings interest rates at competing banks could mean missing out on free money from your savings. It’s worth checking the latest rates periodically to make sure you’re getting the best deal. I recommend MoneySavingExpert for the best bank accounts and top savings accounts.

I hope this post has provided you with valuable guidance on avoiding common money mistakes and setting yourself up for financial success. Managing personal finances is a journey, and while unexpected challenges may arise, these tips will help you build a solid foundation and serve as a reliable tool whenever you need to reset or start over.

Disclaimer: Please note that I am not a financial advisor. The information provided in this blog post is for informational purposes only and should not be considered as financial advice. Always consult a professional before making any financial decisions.