11 Crazy Financial Mistakes You Make Every Day (Without Even Realizing It)
Written by Christy Bowman
June 20, 2018 |
You make financial mistakes every day and you don't even notice them.
We're all battling our personal finances to some degree. We are bombarded with advertisements and they seem to showcase a way of life where things are easier, cleaner, and more efficient than they are in our real lives. So, whatever stuff they're selling that can lead to that better life, we buy it. And as bad as it is to get sucked into buying things because of the pull of the advertising, the real financial blunders are those we make every day.
If you screw up your finances once in a while, you can typically correct your course by implementing a strict discipline to save for a while and deal with your problems. But when you screw up your finances every day, you are, well, screwed. These 11 financial mistakes are not only failing to add much meaning to your life, but because you make them every day, they are making it more difficult to get out of debt and into financial independence.
If something you do every day is on this list, think about changing your spending behavior and look to replace it with a less costly alternative.
1. You Buy Coffee From a Coffee Shop
Everyone is pressed for time. Everyone. And as a result, a lot of people make a stop on their way into work for a cup of joe from coffee shops like Starbucks, Dunkin' Donuts or Tim Horton's. Even McDonald's is fighting hard to become part of your morning coffee routine. But as pressed for time as everyone is, not everyone starts their day by stopping for coffee.
Right this second, you can buy a coffee maker with a timer for less than you will spend on coffee in the next 2 weeks. If you purchase a 51 ounce pack of Folger's Classic Roast, that coffee maker will yield about 76 cups of coffee for the same price as you will pay for 7 coffees from a coffee shop. Program your coffee maker before you go to bed - a process that literally takes 1 minute - and when you wake up your coffee will be ready and waiting for you. No coffee shop can serve you coffee that fast!
Too boot, you won't use a disposable cup or stir stick at home, so you'll do the planet a favor as well.
2. You Add New Decorations to Your Home
If adding new home decor touches is part of your daily routine, you''re making a huge financial mistake. You home accept items may not seem expensive with you make smaller purchases frequently.
But those purchases add up.
If you reinforce a behavior to make home updates frequently, the odds increase you will apply the same practice to big ticket items as well. If you're penchant for home updates results in new couches, art or other furniture on a frequent basis, your home may be pretty, but your wallet will be empty.
3. You Pay For Parking
If you drive to work, you have to park your car somewhere. So you pay for parking. But parking is a brutal expense and it lingers with you for the lifetime of your car. Many parking lots charge $100.00 a month, and that adds up quickly to $1,200.00 per year. Forget gas costs, insurance and the actual costs to buy and maintain a car. Parking alone can justify making a switch to public transit for at least a portion of the days you commute to work.
And if your company allows you to work from home, it may be the same as getting a $2,000.00 raise, because you pay for parking out of your net pay.
4. You Pay Premiums on Overlapping Insurance Coverage
Of all the purchases you make on a regular basis, the coverages within your various insurance policies are almost certain to be the least understood. If you hold health insurance, a credit card and you purchase travel insurance for a domestic destination, you might be paying for the same insurance coverage three times! Your life has risk but that kind of protection is going overboard!
You can save a ton of money by taking a few moments to read the fine print on every insurance policy that you own, including insurance coverage you may receive as part of your credit card agreement.
5. You Buy In-Game Accessories and Achievements
Lots of people burn off steam at the end of a hard working day by sitting down to some video game mayhem. Today's video games are so graphically rich, so immersive, its sometimes difficult to separate fantasy from reality. But if you are making in-game purchases, you have definitely crossed over.
Micro-payments in video games are a $22 billion dollar industry worldwide, and are expected to grow to $32 billion by 2020. If you are parting with your money contributing to such a bizarre industry, you're making a huge mistake. Don't forget, you're literally buying nothing. Not a good. Not a service. Not an asset or even a liability. You are buying nothing.
6. You Make Purchases Due to a Sales Funnel
When you go shopping, do even notice sales funnels? A sales funnel usually takes the form of a small maze you have to walk through just before reaching the check-out cashier. The store is hoping you will see something you want - emphasis on want, not need - and make an impulse purchase. Virtually no items displayed in a sales funnel are they types of things you would actually go to the store to purchase. A mug with a funny quote on it? Not likely. A calendar full of cute dogs? Uhhh, nope. Action figures from a new video game? Please.
But not everyone exercises willpower when walking through a sale funnel. They can add anywhere from 5 to 50% profit to a retailers bottom line, and the reason is because most items in a sales funnel are either high profit items, or items they've struggled to sell on the floor. Getting rid of old stock enables the company to sell more profitable stuff.
7. You Keep Your Investments in Mutual Funds With a High MER
There has been extensive coverage over the years on the gouging that occurs by mutual fund managers on the fees they charge their cients. And yet, even today, consumers turn a blind eye. Management Expense Ratio is a term used to identify the percentage you will be charged annually on your investment's balance by the person or people managing your investment. Often the term managing is used in a very liberal sense, because your funds in a mutual fund may actually be invested by your manager in another mutual fund! They can actually earn a living charging you a 3% MER while investing your funds in a mutual fund whose MER is 2%! Hearing that should be making you scream CUT OUT THE MIDDLE MAN!!!!
8. You Eat Lunch at a Restaurant Every Day
Eating lunch at a restaurant every day is a mistake two times over. Your wallet and your health both get punished in one shot. Eating lunch at a restaurant every day is like adding an extremely expensive bill to your already tight budget. And like your bills, restaurant prices increase over time, effectively making you work for the pleasure of eating at a restaurant.
Eating at a restaurant is different from eating. No one is arguing against you eating. Its kinda like important. But when you go to a restaurant, less than 50% of what you pay is actually going to food costs. You're paying a total of 11 industry groups every time you dine out. So unless its a special occasion, your lunch should really come from Chez Brownbag.
9. You Make Voice Calls on Your Cell Phone
It is no secret I can't stand cell phone companies.You could even go so far as to state I'm at war with them. And in my many battles, the only real chink in the armor I can detect is that if you are willing to live with a cell phone that has the ability to text, but not use voice, you can have a cell phone plan for $15 a month. At that rate, you're still making a mistake, but at least its not crazy.
But if you add on voice, voice mail, unlimited data and other features to the point where your monthly cell phone bill is $100 or more...that is definitely a crazy financial mistake.
10. You Live For Live Sports
Most people enjoy live events. The colors and action are more vivid than even the best tv's can present. And if you only go to a live event once or twice a year, you are not really making a crazy financial mistake. But the people who go to live events every day are for sure making a mistake. Each year, ticket prices increase, and that means that you are putting your retirement off with every game you watch.
Coupling a live game addition with a live TV addiction and you're making a financial mistake that can only be considered crazy. You need to make a choice: scale back on the live events, or scale back on the live TV. Having both is as bad as paying for overlapping insurance coverage: you can't use one if you are using the other.
11. You Own More Car Than You Need
If you drive your car for a total of 1 hour a day, that means your car is not doing anything for the other 23. That's 96% of each day your car is doing nothing. I repeat: nothing. When buying a car, we almost always purchase the car we want, not the car we actually need. With ride sharing options like Uber and Lyft - not to mention a near endless number of car rental companies - the question seriously must be asked: do you need to own a car at all?
Summary
So there it is: 11 crazy financial mistakes you make every day without even realizing it. Do you make these same financial mistakes? Reading this article, will you make any changes to try to fix these mistakes now? Are you aware of any other financial mistakes you or people you know make every day?