Money Mistakes That Eat Up Savings

6 Money Mistakes That “Eat Up” Savings

Schools already teach the basics of financial literacy, but it will be many years before people stop making mistakes in this area. Let’s find out what you’re doing wrong if your house by the sea and your children’s studies at a prestigious university in the capital are still “coming true” for someone else.

Why People Make Financial Mistakes?



You dispose of money in the way that you have learned as a child from your parents. Incorrect patterns of behavior are easily assimilated because critical thinking in childhood isn’t developed, the authority of adults is strong, and personal life experience isn’t yet.


People who make decisions quickly and without thinking adhere to the motto “It’s better to regret what you did than what you didn’t do” (even if it concerns a purchase that you cannot afford).

The Habit of Pleasing Yourself With Shopping

It’s copied from someone’s parents or it appears on its own. Shopping is an easy and affordable way to stimulate the release of pleasure hormones into the bloodstream.

Stereotypical Thinking Imposed by Marketers

Just think of the advertising slogans “You’re worth it,” “Don’t slow down!”, “Live on the bright side”, “Take everything from life” and add to them the folk wisdom of everyday life “We only live once” – and immediately it’s clear why, despite the useful articles and training videos, someone willingly takes a loan from a microfinance organization to buy an iPhone.

Lack of Financial Literacy

You may know the “how not to”: don’t spend more than you earn; don’t skip the fine print when signing a loan agreement; don’t give your card’s PIN number over the phone. But you don’t know “how to” yet either: you don’t have time to get into it, or you don’t have a purpose for which you want to dive into the subject.

A psychologist can help you sort out the most reasons listed above. To fill the gaps in knowledge and become more financially literate, you can use books, articles, and blogs.

To avoid mistakes and their consequences, sometimes even an honest conversation with yourself, a close friend or spouse is enough. Ando of course, you must know your enemy by sight. So let’s list the most common mistakes in the management of personal finances.

1. You Spend Everything You Earn


How it happens: When your salary comes in on your card, it’s a holiday, and then it’s life. Utility bills, children’s hobby groups, gas for the car… Sometimes your winter shoes get worn out and you have to buy new ones, or wrinkles on your face become too noticeable and you have to go to the cosmetologist. Everyone’s income level and list of expenses is different, but the principle is the same: it came and went.

Why is that bad? You are not saving up for major purchases. You don’t save “just in case” and in case of force majeure ask for a loan from friends. You can’t leave a job that you don’t like and don’t make much money because while you are looking for a new one, you won’t have anything to live on.

How do you fix this? Pay yourself first. Set up automatic deductions to a piggy bank of 10% of your salary or any other income. Only then you may spend money on what you love, like playing at the online casino New Zealand or buying tickets to a desired destination.

2. You Don’t Want to Keep a Budget


How it happens: You don’t have time to make a spreadsheet. You believe you keep track of your spending with a banking app – even if you have multiple cards and sometimes pay with cash.

Why is that bad? What you don’t measure, you can’t analyze, control and optimize.

How do you fix this? Choose a convenient tool: a notebook; Excel; a special app for managing personal budget and start using this tool. It will take time to get used to it, but soon you will feel in control of your life and finances, and your inner resistance will disappear.

3. You’re Not Engaging in Spending Prevention

How it happens: You don’t like to get your teeth checked regularly – and once every few years you get your whole jaw treated or have crowns put in. You don’t do extra tutoring with your high school student – and closer to graduation, you pay for tutors. Not insuring your property – and making repairs after a burst pipe. Ignore discounts – and buy expensive things in high season.

Why is this bad? Part of the expense can be prevented, and the money you save can be set aside for your old age, your children’s education, or a more expensive vacation than you used to take.

How do you fix this? Observe the people you consider frugal – ideas will emerge. And go back to the beginning of this block: paying attention to your health and property and disability insurance are pillars of financial stability.

4. You Set Goals Formally


How it happens: You only save up because you “have to”. You dream of a new car because all your friends recently bought a higher class. You save for old age because experts from personal finance blogs advise you to do so. And you don’t calculate the risks and don’t think about how you will overcome obstacles.

Why is that bad? If the goal doesn’t evoke an emotional response, it’s harder to achieve. If you don’t prepare for difficulties, they may seem insurmountable at the X moment.

How do you fix this? Sit in silence and write down your financial goals. Make sure each one makes you feel warm at heart, your beautiful life running in front of your eyes when it all works out. Think about the steps to your goal and the milestones in between, when you can take a break and praise yourself. Write down what can go wrong, and think of at least one solution for each problem.

5. You Automatically Raise Your Standard of Living When Your Income Goes up


How it happens: You become a department head! Your salary has increased, the company pays for VHI and gym. It seems that you should urgently move to a more prestigious area, give the children to a private school and forget about the cottage for the sake of foreign countries…

Why is that bad? Raising your income is a great way to save more for your old age and financial goals. Except that after those quick decisions, there’s nothing left to save.

How do you fix this? Try to live the way you’re used to for a while, and evaluate any new expenses critically. You do not have to deny yourself everything for the sake of the phantom day after tomorrow: you may just like to relax in the countryside and your children are already in a strong school. But the financial and life goals will get closer.

6. You Don’t Create a Fund for Emotional Spending

How it happens: Even if you see a psychologist and practice mindfulness, emotional spending happens.

Why is this bad? Emotional spending disrupts plans, forces you to take out loans, and reduces your faith in your ability to save for your dreams.

How do you fix this? If you take the money to buy “just the perfect purse” or pay for a spontaneous romantic weekend in the next town, the family budget will not suffer. Transfer a small amount there each month and don’t feel bad if you have to take it away. Everyone deserves a holiday sometimes.