10 Money Mistakes Savvy People Don’t Make
We’ve all been there: staring at our bank balances wondering where on earth our salaries have gone. The longer you’re in the workforce, the easier it is to realise that while those with a high income definitely have a leg-up in the realm of money saving, there are a variety of things you can do to make your income go further, and to enter the league of the money savvy.
From learning about banking to questioning experts – here are 10 rules you’ll notice all your financially insightful friends never break.
1 / 10
They don’t overspend
This is the most basic rule that is often the hardest to stick by. It’s fairly simple: don’t spend more than you make, and if you want to be really money savvy, save your earnings too. We’ve said before that 20% of your income should go straight into a savings account. The more you save, the better off you’ll be, so before you spend $20 on a cocktail think about how much spending money you’re working with. A good tip is to automatically transfer your savings on payday. You can set up direct transfers easily.
2 / 10
They know banking is a skill and don’t waste money on unnecessary fees
It’s easy to get bogged down in the nitty gritty of choosing accounts, credit cards and investments but it pays to know what you’re doing and in the long run you can save thousands of dollars. We recently found out that travelling Australians are unnecessarily spending upwards of $183 million dollars on ATM fees, but you should also be taking note of if you’re paying ATM fees at home and look out for the type of interest you’re paying on accounts or loans. Review your bank statements and talk to your bank to keep up to date with the accounts that are the best ones for you, with the lowest fees.
3 / 10
They don’t stop at one income stream; they look for ways to increase it
Have a little something on the side. We’ve spoken about here, here and here. Your salary should be what you live off, but consider consulting, freelancing, investing or heck, even opening an Etsy store. You might even start out doing something out of passion or interest, and realise there is potential there to create a secondary income stream. There are always ways to supplement your income.
4 / 10
Their spending habits aren’t static – big life changes mean financial ones, too
It’s important to reassess your financial situation when necessary as it’s likely to change countless times over the course of a lifetime – your money situation won’t remain static. Big shifts could be changing jobs, buying a house or having a kid. Smaller instances could be planning for the festive season; you’re going to have a lot more outgoings around December and January, so alter your spending in the months leading up to it to compensate.
5 / 10
They don’t take foolish risks with money and instead, invest wisely
While investing can often be key to increasing the amount of dollars in the bank, it’s important to invest wisely. Do not use Deal Or No Deal as your financial marker. Get educated, and find out about different types of investments from art to shares to property to see what works for you and your situation.
6 / 10
They don’t know everything, there will always be a learning curve
People who are good with their finances never assume they know everything – the world of finance can be a complex beast. Asking questions, doing research and finding out as much as you can about your money is a huge element being good with coin.
7 / 10
They don’t confuse value with price
Being frugal doesn’t mean always buying the cheapest thing – there’s a difference between price and value. For example, if you buy a $10 t-shirt that you wear twice before you throw it out the cost per use is $5. However if you buy a $300 coat that you wear every day in winter for two years, the cost per use is much lower because you’ve purchased for value not for price. Know what to spend big on, and you’ll save in the long run.
8 / 10
They don’t ignore their bank statements; they take time to review their habits and budget
People who are good with their money not only make and stick to a budget, they also take the time (usually monthly) to review that budget and find the holes or flaws in what they’ve spent. Create a habit each month where you check your bank statement to understand your own spending habits and then adjust accordingly month on month in line with your goals.
9 / 10
They don’t just accept what they’re told
Financially stable people question everything. As we previously said, seeking out advice from professionals is key to becoming a money savvy human, but don’t do so blindly. Ask as many questions as you need to ensure you actually understand how and where your money is being handled.
10 / 10
They don’t lose sight of the other important things in life
Ultimately, money isn’t everything. Being successful with your finances is a valid goal, but never forget – financial success is only one piece of the puzzle.
Esther is a freelance writer, editor, publicist, content maker and dog patter. She has written for Interview Magazine, New York Press, The Village Voice, Rolling Stone, and local titles Broadsheet, Beat and Tone Deaf. Please tag her in photos of dogs @esthersaurus.