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Making money mistakes is something that a lot of people can relate to. I’m quite sure many of us have probably made most of the money mindset mistakes on this list! In fact, according to a recent study, 78% of Americans have made at least one money mistake in the past year. That’s a pretty staggering statistic! If you’re looking to get your finances in order this year, it’s important to be aware of the most common money mistakes people make to avoid joining this club. Here are 5 money mindset mistakes I’ve become quite conscious of since starting my debt repayment journey
What do you do if you don’t know what your money mindset mistakes are?
Figuring out what your money mindset mistakes are is the first step to taking control of your finances. A lot of times, we can be guilty of making the same mistakes over and over again without even realizing it.
If you’re not sure where to start, here are some questions you can ask yourself:
- Do I have a hard time saying “no” to myself when it comes to spending money?
- Do I spend money on things that I don’t need?
- Do I have a hard time sticking to a budget?
- Do I have a lot of debt that I’m struggling to pay off?
Answering these questions honestly will give you a good starting point to begin changing your money habits.
So here are some steps I am taking to improve my decisions around money this year in 2021.
1. Acknowledging pain points and weaknesses:
I love shopping online from time to time, and with the 2020 dumpster fire, everything was accessible to purchase online since we were all at home. Buying a few things over the internet used to be a convenience for me, but then it became the norm.
Because of this, I had an infinite number of emails and subscriptions for things I didn’t even want, but that still didn’t stop the temptation to click on them and see what else was online to buy. So I deleted or blocked some of those subscriptions.
2. Understanding limits:
I remember seeing an Instagram post several months ago that described a daily spending objective that could be reconstructed into a daily savings goal.
The general idea is that if you spend $27.40 a day, you can save $10,000 in one year ($27.40 x 365 days = $10,001.00). Of course, this money doesn’t just appear out of thin air; it comes from the money you would’ve spent anyway!
If you went on Pinterest, you probably find a ton of money, savings, tips, hacks, and challenges that can provide you with clarity on the resources that you do have at your disposal.
So I’m attempting to apply the same strategy to my DoorDash side hustle, setting a daily earnings objective. I could pay off my student debt in no time if I set a goal of earning at least $30.00 each day in additional side income!
So how do you get started?
By using some of the tools that you already have at your disposal to generate a second source of income for yourself. For example: Do you have a car? Internet? Phone? A social media account? Or a community? Is there a way to leverage those resources and turn them into profit?
3. Ability to stand in truth:
The next thing that I had to do was get into the habit of sharing my financial goals this year with people, the first step to changing your behavior is acknowledging it. So I created a YouTube channel to keep me accountable.
4. Significantly reducing media consumption:
A quick Google search shows that we are exposed to about 6 to 10,000 ads per day. That’s a lot of ads!
I’m not just talking about the ads that you see on TV or when you’re scrolling through your Instagram feed. I’m talking about the ads that are on the bus stop, in the subway, on your favorite websites, and even in your email inbox. The average person spends about two hours a day on social media, which equates to about 30% of our waking hours.
I’m not saying that you should eliminate all forms of social media from your life. But I am saying that you should be mindful of the amount of time you’re spending on it.
If you find yourself mindlessly scrolling through your feed for hours at a time, it might be time to take a break from social media. Your wallet will thank you for it.
My guilty pleasure is watching haul videos. I love haul videos! But watching these types of videos back-to-back can be a lot of consumption of consumerism.
I realized instead of completely muting some of my favorite content creators or forgoing watching fashion content on YouTube altogether, I could instead focus on content creators whose content is more focused on reusing the clothes that they already have.
Many of them make great videos based on sustainability rather than consumption, by showing you how to style the same items multiple ways and teaching you how to shop your closet.
5. Getting real:
I’ve realized that for this to work, I have to take into consideration some of the potential roadblocks ahead.
So, for example, I already know that there are going to be some potential expenses in 2021 that I’m going to need to plan for, my top three are emergency car repair, unexpected bills that I did not quite plan for, and spillover expenses from 2020.
So I’ve decided to set parameters for myself:
- Have an emergency fund of at least $1000.00.
- Be specific about my goal. My financial goal for 2021 this year is to pay off an $18,000.00 private student loan bill in 12 months by using all side hustle income.
- I then need to put parameters around my goal so that it’s achievable, beginning with:
- All side hustle earnings will be used unless there is an additional bill that needs to be paid, that cannot fully be covered with my full-time earnings.
- There’s an emergency that exceeds the amount of money that I have currently in my emergency fund savings.
That’s all for now. I’ll keep you updated on how well I’m doing in keeping this up.
If you’re guilty of any of the money mistakes on this list too, don’t worry! You’re not alone and it’s never too late to make a change. Remember, baby steps lead to big progress. Just by becoming aware of these money mindset mistakes, you’re already on the right track to financial success.
What money mistakes do you need to stop making? Share in the comments below!