10 Financial Mistakes to Stop Making in 2014

by Mikey Rox on 10 January 2014 0 comments

While 2013 might not have been as much of a financial whirlwind as what we've seen in the past, it seems as if our ability to be frugal, manage our own money, and grow our portfolios is as haphazard as ever. (See also: Money Management Beyond the Budget)

Even in the wake of an abundance of information and education on the subject of personal finance, people continue to be plagued by heavy debt, low earning potential, and what seems to be a lot of misplaced energy when it comes to financial activity.

The good news is that avoiding these mistakes is simple.

It doesn't take a degree in economics to learn how to be frugal and smart about our own wallets and pocketbooks, even in a time when financial uncertainty is front-and-center on a weekly, if not daily, basis.

Regardless of our country's political and economic situation, this is still a place where you can succeed, and avoiding the following errors will set you up to do so in 2014. (See also: Financial Moves to Make in the New Year)

1. Stop Using Credit to Pay for Non-Essentials

Of course, if you pay your balance every month, you can take advantage of credit card rewards programs. But if you can't, or if you want to budget carefully and avoid impulse buys, put away the card, and use cash. (See also: 12 Habits of Responsible Credit Card Users)

2. Stop Procrastinating on Your Taxes

If you don't have your ducks in a row for your 2013 taxes, it's a little late now. However, you can be ready and prepared for when things come around next year to make sure you get what you're owed in a return.

Keep an envelope with receipts of all tax-deductible expenses for 2014; basically anything for your business or anything that comes out of your pocket for work-related expenses or your home, if you have a mortgage.

For this year's tax return, keep a folder of all tax-related documents from employers, banks, etc, so you have everything you need to process your return. (See also: Tax Document Checklist)

3. Stop Wasting Money on Unnecessary Protection Plans

Extended warranties, protection plans, and extra insurances are usually unnecessary. If you buy a new washer and it breaks after the year-long manufacturer's warranty runs out, just call a local repairman. He'll probably fix it for a lot less than what the extended warranty would have cost.

4. Stop Deferring Home Maintenance

Although home prices are still gaining slowly, the housing market is likely to improve in 2014. That means that any equity you can put into your home will help improve its value, even if it's just cosmetic. (See also: Home Renovations That Pay for Themselves)

5. Stop Waiting to Buy a House

If you're looking to buy a house but have been putting it off, don't wait too much longer. After dropping to historic lows, interest rates are inching up again and are likely to continue doing so in 2014, making buying a house more difficult to afford.

6. Stop Forgetting to Pay Yourself First

Don't wait for your income to increase to put money into savings. If you treat your savings account like that, it'll never see a dime of contribution. Instead, curb your spending and prioritize at least a modest contribution to your savings account on a regular basis.

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7. Stop Avoiding Retirement Savings

A lot of people (especially those in their 20s and early 30s) are content to completely ignore the topic of long-term savings and retirement planning. Keep in mind that the younger you start saving and planning for retirement, the easier it'll be on your cash flow.

If you start in your mid-20s, a weekly contribution to a low-risk mutual fund, 401k or IRA of around $20 is more than enough. (See also: Retirement Planning If You're Under 30)

8. Stop Spending Too Much on Entertainment

Entertainment is important, and you shouldn't starve yourself of fun and down time.

But if you've got a subscription to Netflix and Hulu Plus to go along with the Ancestry.com account you've never used and the premium subscription to Spotify, it's time to cut back.

Pick one or two that you actually use and enjoy, then get your cancellation on. (See also: How to Save Money on Entertainment)

9. Stop Going Into to Debt for Education

Mike Rowe will tell you, a traditional college experience is not necessary or right for everyone. If you're planning to go into an exorbitant amount of debt for continuing your education, you need to weigh the cost against what the degree can eventually get you in terms of a paycheck.

That's not to say that college is bad or always the wrong choice, but choose how you invest in your education carefully. (See also: Learning Without the High Cost of Higher Education)

10. Stop Thinking Paycheck-to-Paycheck

It's fine to have a short-term budget and a weekly idea of what you make and spend, but too often this leads to a paycheck-to-paycheck kind of mentality, where you have money going out as quickly as it comes in.

Take the time to have a forward-thinking approach to your budget and finances that leaves room for both the present, the future and the unforeseen. In other words, don't neglect good financial planning just because you have "enough to get by."

Making 2014 a Good Year

If you're able to avoid the pitfalls, you can make 2014 a good year in terms of your personal finances. Often managing your money is more about avoiding mistakes and being consistent than it is about being a brilliant economist. Make sure you commit to saving, avoid non-essential debt, and think long-term.

It'll almost certainly make a difference if you weren't doing those things in 2013.

What personal finance mistakes are you committed to stopping in 2014? Please tell us in comments.

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