3 Money Mistakes You Must Avoid At All Costs

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I think it’s very important to talk about our relationship with money, what we do well and what we don’t do so well. Money is very important for every single one of us, so having a good financial education is a must.

For a long time, I used to spend money on things that I didn’t need just to feel better about myself. It took me a few years and quite a lot of debt to realize that my lifestyle at the time wasn’t healthy or sustainable.

Over the past two years, I’ve found ways to improve my spending habits and avoid some of the mistakes that were holding me back.

In this article, I’ll talk about 3 common money mistakes and how to avoid them.

Avoiding pain when you pay

Let’s say that tonight you go to a $100 dinner with your partner or with a friend. You’ll have to pay with either a credit card or cash. Which one feels worse?

Most people will probably agree that paying cash feels worse.

Why is that the case? What exactly happens when you don’t pay cash? Well, the timing of payment and consumption doesn’t coincide. With cash, we pay and consume at the same time.

With a credit card, we consume it but we’ll pay it later.

Our enjoyment simply ends up decreasing when consumption and payment do not overlap.
This is why you should try to pay in cash or with a debit card if you want to experience more pain when spending. On the other hand, if you don’t mind spending more, then a credit card is probably the best option for you.

Not reflecting on past purchases

Every time we buy something, we basically predict how happy that thing will make us. This helps us decide whether we want to buy a certain item or not.

Most people don’t do the opposite. They don’t look at the things that they bought in the past to try to find out how happy those items really made them.

It’s always a good idea to reflect on your past purchases and see how much joy they brought you. Once that’s done, you can start eliminating or reducing your spending on things that didn’t bring you any enjoyment.

Not making savings visible

The biggest problem is that most people don’t compete on savings, although there was a time when things were different.

Most people care more about spending because that’s something that others can see, so it gives them a sense of achievement.

This is why you should try to find ways to make saving more visible to you, your friends, and your family. That will serve as a reminder of the importance of saving for future expenses.

If you want some extra motivation to save more money, try thinking of mechanisms that you could implement to make it visible for yourself and those around you.

CONTRIBUTED BY Rachel Miller.

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