6 Money Mistakes to Dodge for Financial Success in 2024
Written by
Adam Palasciano
Edited by
T. Woods
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Big money mistakes can be frightening and are some of the biggest roadblocks to financial success. Many of these financial mistakes stem from financial illiteracy. MarketWatch recently reported that the average American says they lost $1,819 due to a lack of financial knowledge.
But, costly mistakes don’t have to define you; most of them can be corrected. There are some common money mistakes to be aware of so you can avoid them and set yourself up for success.
Here are five money mistakes to avoid to ensure your financial success, according to CNBC.
1. Not Planning
A lack of financial planning can spell trouble. Whether it’s starting to save for retirement from a young age, starting a college fund for your child when they’re born or putting away money for a down payment on a home, these are all financial planning initiatives that should not be avoided. Planning is crucial to ensure long-term financial success.
2. Not Setting Goals
Goal setting is an important part of financial success. Asking yourself these questions can help you determine your goals: when do you want to retire, what do you want to leave to your next of kin and where do yuo want to live later in life? Determining these factors can help you visualize the financial steps you need to take to ensure you meet your financial goals in time.
3. Chasing “Quick Wins”
Dumping all of your extra money into stock options or in a risky investment with the promise of “getting rich quick” is a dangerous concept. If it seems too good to be true, it probably is. Always do your research about what you’re investing in before you do so.
4. Taking An “All Or Nothing” Approach
Putting all of your money into one type of investment, stock, or other asset can be a grave mistake. If you invest everything into one stock that seems promising and then it tanks, you’ll lose everything. Diversification is key when it comes to investing and this strategy allows you to hedge your risk.
5. Not Having a “Rainy Day Fund”
Not putting money aside for life’s surprises can come with consequences. It’s advisable to have at least 3-6 months’ worth of living expenses stored away in a liquid cash high-yield savings account. A rainy day fund can keep you afloat in the event of an unexpected job loss, a surprise medical bill or auto repair, or if you need to stop working for a period to take care of family matters. Ensuring you have a sufficient nest egg can also help you stay out of debt in the event that you need extra cash.
6. Not Paying Off Debt
Eliminating your debt is necessary to achieve your financial goals. Holding on to debt long-term, especially high-interest credit card debt, eats a hole in your finances. Be sure to prioritize paying down your debt before you put most of all of your money towards investing or saving.
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