The Most Common Money Mistakes and their Remedies
 As a financial counselor, I see the same money mistakes time and time again.
If these mistakes are not addressed, personal finances can quickly get out of control and become a major source of stress for you and your family. Fortunately, most mistakes can be fixed. Below is a list of the most common money mistakes and their solutions.
Putting all financial responsibility for the family on only one spouse. This arrangement can be very stressful to that spouse even in good financial times, but when money is tight it can be overwhelming. It’s vital to open the lines of communication and to share the burden of managing money. Schedule time on a regular basis to sit down together and confront the situation so that you can work on a solution together. It’s best to do this when the children are occupied and you’re both relaxed.
Not saving for a rainy day or for the future. If you don’t have money readily available for an emergency or money invested for retirement, it’s time to get serious about doing so. Putting a little each month into a savings or investment fund doesn’t have to be an overwhelming task. Cut out one of your luxuries and designate the savings for emergencies. For example, if you dine out three times a week, commit to cutting out one dinner per week. Instead, eat at home and write a check in the amount you saved directly to your emergency or retirement account. Small changes can add up to big bucks over time.
Making savings too easily accessible. Remove the temptation of spending money that is ‘just sitting there.’ If you have to, make the money less accessible by opening a checking or savings account that is across town and ripping up the checks that come with that account. Only a truly important purchase will be worth the trip across town to get the money.
Raiding the emergency fund because everything seems like an emergency. Make a list of true emergencies and commit to these as the only reasons you can dip into this fund. This will help ensure the money will be there when you face a true emergency.
Waiting until the end of the month to add to savings. As soon as you get your paycheck, write a check to your emergency fund, savings and retirement accounts. But, don’t short yourself so that you have to use credit cards. Work your budget so that each month you can put some money into these savings accounts without getting further into debt.
Giving into impulse purchases. When I talk with clients about impulse purchases, they mention everything from small decorating items for the house all the way up to cars and trucks. If impulse purchases are making it difficult for you to control your finances, avoid those stores that tempt you to spend. Next, always make a shopping list and commit to stick to it. If an item you want to buy is not on the list, use the 48-hour rule. Give yourself 48 hours and if you still feel that it is worth it, go back and get it. Chances are you won’t even remember what the item was.
Continuing to add to credit card balances. You’ve all heard it before – the only way to get out of debt is to pay more than the minimum payment on credit cards. What you may not realize is that you need to stop using credit cards or pay off any new purchases that you charged that month to make that strategy work. It’s essential to stop adding to the credit card balance so that you can pay it off.
Carrying credit cards around. If you are serious about cutting out credit cards, but you want to keep one in case of an emergency, put it in a bowl of water in the freezer. It will take some work to be able to use it but it will still be available if you truly need it.
Not asking credit card companies for better rates. Many clients assume that the interest rate that a credit card company charges is the rate that must be paid. This interest rate is negotiable, so if you pay consistently on time, explain to the credit card company that you are a reliable customer and that other companies are offering you lower rates. Then ask them to lower the interest rate. Most credit card companies will reduce their rates substantially to keep you as a customer.
Not paying the highest interest rate credit card down first. Many clients pay $10 or $20 over the minimum payment on each of their credit card bills. They end up making payments year after year yet it doesn’t ever make a dent in the balances. Instead, make only the minimum payment required on all of your lower interest rate cards and pay as much as you can on the card with the highest interest rate. Once you pay that credit card off, focus on the next highest interest rate card.
Waiting to get help. Many clients wait until they feel like they are drowning in debt before they seek help. The saying “an ounce of prevention is worth a pound of cure” applies to finances as well. As soon as you have any indication that money is tight, call MINES and Associates, your EAP provider, for help. A financial counselor can work with you to sort out your finances and to take control of your money.
Source
Michelle Pastor, MBA and Accredited Financial Counselor
Michelle is available through your EAP for free financial coaching. Request an appointment with Michelle by calling MINES at 800-873-7138.
About MINES & Associates
For 30 years, MINES & Associates has been a nationally recognized business psychology firm that provides a variety of services to corporate employers, including: employee assistance programs (EAP), managed behavioral healthcare, organizational development and psychology services, wellness programs, behavioral risk management, disease management, PPO services, and a number of other technology based services.
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