Don’t Let These 10 Money Mistakes Wreck Your Financial Future!

“Wealth from get-rich-quick schemes quickly disappears; wealth from hard work grows over time.” (Proverbs 13:11, NLT)

Whether you’ve just started out in the workforce or you’ve been earning for a while, you should keep track of your finances. Achieving retirementand savings goals can be challenging, and everyone makes a mistake now and then; however, being well-informed can help reduce your risk. Avoid these real-life money mistakes, and this could be your best financial year yet!

1. Living beyond your means. This sounds like an obvious choice, but many people spend as if they’ll always be earning the same amount or more. Job changes, family emergencies, unforeseen illnesses—all of these life events can take a toll on your financial well-being. And if you are a two-income family that spends all of both incomes, you could be in big trouble if one of the earners loses their job.

2. Going into debt for a wedding or vacation. The temptation is everywhere to treat yourself to a lavish four-star vacation or to spend big on a wedding fit for royalty, but don’t go into debt to fund one experience. Rather than borrow for a wedding or vacation, why not postpone your plan and save up—or scale down your expectations and enjoy a more frugal event? After all, you want your memories, not the debt you incurred, to last a lifetime.

3. Not buying insurance. It’s tough to appreciate the value of insurance when you’re in good health and employed full-time, but insurance on your life, your health, and your home is a must. Getting these policies early in your working life can help insure that costs stay down.

4. Not having an emergency fund. You’ve probably heard that you should have one to six months’ expenses on hand in case of emergency, but studies show that very few people actually have that much saved up. Got a raise or an unexpected bonus? Sock the extra cash away for a rainy day. A money market account is a good place to put your emergency fund—it’ll earn higher interest rates than a savings account, and there’s no penalty if you need to access the cash in a hurry.

5. Not budgeting. Spreadsheets! Math! It may seem complicated, but a good budget will fit your life and free you up so you can enjoy what you have and stop worrying about money. Make a note of all your expenses for a month—not just rent and utilities, but those little extras like lunches out and Amazon Prime impulse purchases. Once you see exactly where your money goes in a month, you can start figuring out where it can be better spent—or saved.

6. Not investing early, or not investing at all. It’s never too early—or too late—to invest. Investing isn’t just for the rich; over time, compound interest can grow even the pennies you pinch with your budget into a comfortable nest egg. You’ll want to get some good advice on the best investment mix for your stage of life and your long-term goals. That brings us to the next point:

7. Not setting financial goals. You might have a few dollars stashed away for an upcoming trip or a friend’s birthday party, but what about long-term goals? Would you like to have enough passive income not to rely on a 9 to 5 job? Are you ready for life events such as a wedding, buying a new car, or having a child? Will you be faced with having to care for aging parents? Setting aside money for the future is an important step for anyone looking to achieve financial independence.

8. Not saving for retirement. When you first start working, retirement seems far away. But it’s a mistake not to start a retirement plan while you still have decades left to pay into it. Try a financial calculator to see how much you can save even with small contributions now, and try to maximize your contributions to any 401k or other retirement plan your employer offers.

9. Carrying too much debt. Borrowing sensibly and within your means for a car or a home is one thing. But too much consumer debt can sink anyone’s budget fast. If you’re in debt, make a budget and follow it. Take a careful inventory of everything you owe. You’ll need a solid plan to eliminate your debt, but careful stewardship can make it happen.

10. Not knowing (or understanding) your credit score. Most people don’t know their credit score, but those three digits can add up to either great rates on loans for a car or house—or paying extra for those big purchases. Your credit score tells prospective lenders, employers, and landlords how you handle your money, so it’s in your best interest to get your yearly free credit report, and to correct any mistakes you find.

This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.