10 common financial mistakes …you should avoid!

What would it be like when you make a hasty financial decision to suddenly get an Error 404?! No savings found, no financial plan found, no trace of future well-being? The little pleasures we give ourselves sometimes become a routine of compulsive spending that easily erodes savings and destabilizes entire budgets and financial well-being.

We’re talking about the ones we face daily, that can affect us if we don’t make the right financial decisions.

It is said that great savings are often lost bit by bit.

10 common financial mistakes...you should avoid!

Try to weigh how much is emotion, where needs fit into this story, and how much is rewarding yourself. Small financial-wise decisions for big positive effects and structured saving remain solutions that we find together at Educated and Rich. You will have a custom-made financial plan without crossing everything off from your wishlist.

Let’s review some often-made financial mistakes so we can avoid them in the future:

1. Excessive or repetitive expenses. No, no!

Great fortunes are often lost penny by penny, – saying across the Ocean. It may not seem like a big deal or that it could affect your finances in the long run when you buy a double latte for 25 RON-way too much- or have seafood dinner 2 times a week or buy very often a new gadget without needing it. Every impulsive decision counts, unfortunately.

Even 8 going out a month can add up to a considerable amount of money to save. We believe in healthy financial well-being. Let’s not confuse natural rewards or small pleasures with repetitive, exclusive decisions to spend.

If you’re also going through financial hardship, avoiding this mistake matters.

2. Endless payments

Ask yourself if you need items/services that require you to pay a fixed amount every month. We all like watching good movies, that’s a fact! What we don’t normally think about is that television, music subscriptions, or gym memberships can take you to pay endlessly, and leave you with no plus value in the end. Weigh your options carefully, renegotiate offers, change your subscription type, or drop them when they are too many or if you use them very frequently.

3. Credit card … in case of excess

Using credit cards to buy essentials has become something normal. Most of the time it leads to spending more than we earn / we can afford.

Even though a growing number of consumers are willing to pay huge interest on several items that disappear long before those bills are paid in full, the credit card seems like one of the frivolous choices available to anyone. Talk to a coach to make a decision that’s right for you.

4. Another car in the garage?

Careful! Paying for a product is not the same as affording the product itself, in this case, the car. More and more people are changing cars every two or three years and losing money with each transaction.

Few buyers can afford to pay for a car in cash, and yet in Romania, the number of cars has increased to at least two cars/per family of 4. Europe’s car park will reach 273 million cars in 2025, a worrying number not only for the financial pattern of purchase but also for the environment.

In addition, by borrowing money to buy a car, the consumer is paying interest for a depreciating asset, which widens the difference between the value of the car and the paid price for it.

A mistake that we don’t take as a financial one, but we should, is the choice of car model. Why? Because if you opt for a car with high consumption and very high maintenance costs. If you add insurance, from the start the choice is not favorable.

A more reliable, cheaper car adapted to financial needs can lead to earlier debt payment, a better holiday to enjoy, or money saved for future children’s education.

5. Home sweet home?

Speaking about buying a home, bigger is not always better. Choosing a house of hundreds of square meters will only mean more expensive taxes, maintenance, and utilities.

So question it twice. If you don’t have a large family and you had no children yet, your lifestyle or job predisposes you to relocation or frequent moves. Do you want to put such a significant, long-term, possibly 30+ years, strain on your monthly budget? It is not for nothing that financial experts around the world recommend that you only buy the house you can afford.

6. Your Attractive Heading

If you’re in the position of waiting for the next paycheck like a lifeline, any unforeseen problem with financial repercussions can become a disaster you are not prepared for.
Overspending takes you to a precarious place. A place where you need any leu/penny you earn and expect the salary to save you.

Job loss or changes in the economy can drain your savings and put you in a debt-paying cycle. A three-month no-salary period could make the difference between keeping or losing your home, and you should avoid such situations.

Always consult a financial expert to determine steps for any financially sensitive action.

7. Your Attractive Heading

If you don’t put your money to work for you in the market or invest in things that generate income, you may never stop working. Making monthly contributions to designated/elected retirement accounts is essential for a comfortable retirement.

8. Borrow money

When you are constrained by a financial situation you may be tempted to borrow money. When you do this, you put pressure on your relationships and make even more rash decisions later. Avoid this by having a reserve fund/emergency fund.

9. Lack of an investment strategy

If you’re investing in stocks or mutual funds as part of your investment plan, it’s important to have a strategy for that money. Too many people let their emotions get in the way and end up buying or selling on impulse. Another common misstep is spending too much time and effort trying to time the market, hunt for the “big win” or chase the investment of the month/week/day. Instead, you have to decide on a strategy and stick to the plan!

10. The plan…of not having a plan?

Take the time to plan and don’t leave your finances to chance. A financial plan can help you make sure your spendings match your priorities.

Making monthly ‘’contributions’’ to your savings account can help you build a solid umbrella for a rainy day. There can be several unexpected expenses such as car repair, home renovation, an unplanned vacation, medical emergencies, and more. It would be best to build up your savings to handle these unexpected expenses. Understand your risk profile and invest in different ways.

The advice of a financial coach can save you from small and big mistakes. I’m waiting for you to discuss how to fall in love with saving and financial decisions adapted to your needs!

Leave a Comment

Your email address will not be published. Required fields are marked *

CAPTCHA ImageChange Image

Scroll to Top