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Stop making these 15 money mistakes

Stop making these 15 money mistakes
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Discussing money with our loved ones is awkward at best – and intimidating and nerve-wracking at worst. While budgeting is by no means a sexy topic of conversation, it’s a necessary endeavour to achieving your goals and creating the life you want.

Unfortunately, there are plenty of financial decisions that cost us dearly – just think about what you could do with an extra $2,500 to $5,000 in your pocket. It’s not typically one big ticket item that breaks a budget, but rather, “death by a thousand cuts” as the saying goes. The bright side is that your simple mistakes often have simple solutions.

Using credit instead of cash

Using credit instead of cash
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Having room on a credit card isn’t always a good thing: research shows that people spend up to 18 per cent more when using credit cards instead of cash. If you have the ability to buy “that extra something,” your impulse spending risk goes up; if you have a points or cash-back credit card, you’re even more likely to spend to get the extra points.

The solution: Leave your card credit card at home and withdraw cash for shopping – especially for groceries. Here are 5 ways you can save money using credit cards.

Making only minimum payments on your credit card

Making only minimum payments on your credit card
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Making minimum-only payments is a financial No Man’s Land. Case in point, if you have a credit card with a balance of $5,000 and an interest rate of 19.9%, you’re required to pay two per cent as a minimum payment on a declining balance – think $100 on the first month, $99 on the second month, and so on. At that rate, it will take you about 65 years – and more than $22,000 in interest! – to pay off your credit card. If you take that same scenario and upgrade to a fixed payment of $125 per month, you’ll be debt-free in just over five years (assuming you’re not reusing the card). Of course, you’ll still pay $3,274 in interest, but your future-self will thank you for the saved time and money.

The solution: Do your best to put your credit products away. If you absolutely must use credit, be sure to make higher than minimum payments. Here are 6 more surprising ways you are wasting your money.

Purchasing a brand new car

Purchasing a brand new car
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That new car smell is inviting, but the costs associated with it can sour your purchase. Plus, your car depreciates in value the moment you drive it off the lot – statistics range from a 10 to 20 per cent drop within the first year.

The solution: If you’re in need of a vehicle, consider buying a reliable used vehicle. You’ll save on the value and your monthly payments will likely be lower. You’re wasting your money if you’re buying these 13 things in brand-new condition.

Ignoring low-interest credit products

Ignoring low-interest credit products
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Some interest rates on various credit products can be anywhere between 25 to 40 per cent, and payday loan interest rates, when annualised, can be over 400 per cent.

The solution: If you can, consolidate your debt into a product with lower interest rates. Save money in other ways you’ve never thought of before with these tips.

Having expensive hobbies

Having expensive hobbies
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There’s nothing wrong with a round of golf or a dance class for couples, but it’s important to consider the whole cost of your recreational activities. Factors like registration fees, equipment and transportation tend to add up quickly.

The solution: Consider activities that are in line with your budget and look for ways to save some money. For instance, if you love golf, try buying used equipment.

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Buying coffee-to-go every day

Buying coffee-to-go every day
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A daily cup of coffee on your way to work can cost you $10-$50 per week. Multiply this by 52 weeks in a year and that cost shoots up to $520-$2,600. And remember: that figure doesn’t even include the coffees you may purchase during your lunch breaks or on weekends.

The solution: Purchase a travel mug, make your coffee at home and consider fancying up that cup of joe by adding vanilla or cinnamon. If you absolutely must have that store-bought coffee, buy yourself a coffee card and stick to an allowance of $25 per month. Here are 5 more bad financial decisions you need to stop making.

Going out for lunch at work

Going out for lunch at work
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If you eat out for lunch twice a week, it will likely cost you anywhere between $30-$50 per week. If you add this up over the year, it can cost you anywhere from $1,500-$2,600. Yikes!

The solution: Pack your lunch to work and treat yourself monthly to a lunch out with the team. You can even try giving your family and yourself a cash allowance for eating out every month. Once the cash has been used up, it’s dinners at home until next month.

Disregarding a weekly meal plan

Disregarding a weekly meal plan
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We’ve all been there: you’re at the supermarket with your grocery list in hand and think to yourself, “Wait, do I already have this item in my pantry?” You purchase the product anyway, and lo and behold, it was sitting in your kitchen the entire time.

The solution: Create a weekly or bi-weekly meal plan after checking your freezer, pantry and fridge for items you might already have. Apps will also allow you to shop the flyers, compare prices and price match. And of course, only buy what’s on your list. Spend less on groceries with these 19 tricks smart shoppers use.

Overusing utilities

Overusing utilities
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The solutions:

Use appliances on off-peak times
Make sure your doors and windows are properly sealed
Consider equal payment plans to make budgeting easier
Cancelling your cable or landline if you’re streaming content or only using your smartphone

Here are some tips to manage your phone’s data use to stretch your mobile bill further.

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