6 Common Money Mistakes You Need to Fix

1. Neglecting a Budget

One of the biggest mistakes people make is failing to create and stick to a budget. Without a budget, it’s easy to overspend and lose track of your money. 

Related Resource: How to Create a Budget in 8 Steps > 

2. Ignoring Emergency Savings

Many individuals overlook the importance of having an emergency fund. Without savings set aside for unexpected expenses, you may resort to credit cards or loans, leading to debt. Aim to save at least three to six months’ worth of living expenses in a separate savings account. 

3. Carrying High-Interest Debt

Carrying high-interest debt, such as credit card balances, can be financially crippling. The longer you carry this debt, the more interest you’ll pay, making it harder to achieve financial stability. Prioritize paying off high-interest debts first. Consider using the snowball method (paying off the smallest debts first) or the avalanche method (focusing on the highest interest rates). 

4. Failing to Plan for Retirement

Many people underestimate the importance of saving for retirement, thinking they have plenty of time. However, the earlier you start saving, the more you can benefit from compound interest. If your employer offers a matching contribution, aim to contribute at least enough to get the full match. Increase your contributions over time. 

Related Resource: Federal Retirement Planning > 

5. Living Beyond Your Means

It’s easy to fall into the trap of lifestyle inflation, where increased income leads to increased spending. This can result in living beyond your means and accumulating debt. Practice mindful spending by distinguishing between needs and wants and set financial goals that prioritize saving and investing over unnecessary expenditures. 

Related Resource: Improve Your Finances with a Financial Fast > 

6. Thinking You Need a Lot of Money to Starting Investing

You do not need a lot of money to start investing. Waiting until you “have enough” can cost you valuable time and compound growth. You can begin investing with as little as $25 or $50 a month and grow from there. The key is to start early and remain consistent. 

WAEPA’s Free Financial Wellness Program

WAEPA members have access to a free Financial Wellness Program through our partnership with Ernst + Young (EY). This program includes access to tools and financial advisors to help manage day-to-day finances and work towards long-term goals. 

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