- One of the most common money mistakes is the inability to enjoy your hard-earned money.
- Some people become so insecure about managing their money that they stop tracking their spending completely.
- Financial infidelity, or lying to your partner about money, can snowball into larger problems later.
- Read more stories from Personal Finance Insider.
Everyday money mistakes that seem small right now can snowball into larger problems down the line.
We asked a financial therapist and a financial behaviorist, who both teach at Kansas State University, about the most common money mistakes that people make.
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Surprisingly, they didn’t talk about 401(k) plans, skipping your morning coffee, or how much you should keep in your emergency savings fund. Instead, most of these overlooked mistakes are behaviors that put you in a vague or negative mindspace when dealing with your money.
Here are the five most common money mistakes that people make, and what to do instead.
1. Focusing too much on saving money
What to do instead: Make space in your budget for comfort spending
“If you’re just solely focused on trying to budget, trying to maximize savings, you’re going to get burnt out. And you’re going to get burnt out quick,” said financial behaviorist Blain Pearson, Ph.D., CFP.
Pearson warned that focusing too much on the number in your savings account can cause you to miss out on social connections, fun, and once-in-a-lifetime experiences.
People don’t take time to “overcome the guilt that comes with spending money,” he continued, especially money that you saved for a special purchase.
While having the insurance and safety net of a savings account is important, Pearson said, “You want to view money as an access tool.” Think of money as a tool that enables you to enjoy life, instead of something to obsess over.
2. Not tracking your spending
What to do instead: Look at the numbers for five minutes every day
“Many people are insecure about their inability to manage their money, so they just avoid it,” said financial therapist Megan McCoy, Ph.D., LMFT, AFC, CFT-I.
She shared a story about her students renting electric scooters that were newly installed on campus. Even though each rental session was only $5 to $7, her students didn’t realize how quickly it added up, and, soon, they had spent all of their money on electric scooters. That would have been fine … had it been a conscious decision.
“Tracking spending can help you decide, ‘I love it, it’s worth it. This makes me happy,’ or ‘I’m not getting any joy out of this,” she said.
Instead of staying in vagueness about your spending, McCoy suggested getting an app, or putting cash savings in envelopes, or “whatever works best with your learning style” to watch how where your money goes. Spending as little as five minutes a day cultivating awareness around your spending can make a huge impact.