5 Financial Mistakes To Avoid in 2023 (and Beyond)
The most financially savvy person isn’t immune to making money mistakes, and this is OK. Sometimes it can be helpful to check up on where you stand financially to ensure you’re not accidentally overspending on something you don’t need or putting off any financial commitments with deadlines.
Review some of these most common money mistakes and, if necessary, make the appropriate adjustments.
Sticking to Outdated Financial Goals
Most individuals set financial goals when they first start a budget and work carefully to reach these goals accordingly.
Take a moment to check in with your financial goals. Did you recently meet any of these goals, such as paying off credit card debt? Are any of your financial goals no longer relevant to you and your needs? Review the financial goals you have right now. Re-determine the priority of each goal. If you find some are no longer relevant or you already met these goals, make a note to set new financial goals to align with your life changes.
Delaying Maxing Out Your Retirement Account
Do you have a traditional or Roth IRA retirement account? There’s still time to max out your account contributions in 2022. Anyone younger than 50 may contribute up to $6,000 to their account for the year. Those over age 50 may add an extra $1,000 each year as part of their catch-up contributions.
While it’s not a financial requirement to max out your retirement account each year, it is highly recommended you do so if you are able to afford it. This is also true of any employer-sponsored retirement plans you may be participating in at your workplace. Maxing out these accounts allows your investments, and any potential earnings, to grow on a tax-deferred basis.
Not Reviewing Credit Card Statements
How often do you check your credit card statement? It’s not uncommon to skim over a statement to get to the total balance due or decide not to read it at all and let automated payments take care of it.
Those who carefully review their credit card statements each month, however, may find they are able to prevent common financial mistakes from occurring. Some of these may include cutting back spending on services you rarely use or noticing a duplicate charge you did not make and may notify your credit card company.
Choosing Not To Automate Bill Payments
Choosing not to automate bill payments is not necessarily a mistake. Rather, it is a suggestion which can help keep bill payers from making financial mistakes such as forgetting to mail in a check or make a payment by a specific bill’s deadline.
Automating financial decisions, from scheduling payments to setting aside a percentage of your income towards retirement, does a bit more than ensure you’re meeting deadlines. It can help you save money.
For example, let’s say you have a specific dollar amount taken out of each paycheck. You put it directly into an investment fund, like a low-cost index fund, through an automatic contribution setup. Regardless of what happens in the stock market, you are putting money into the market.
Embracing automation is more than setting up contributions and not having to think about it afterwards. In the long run, automation helps individuals practice dollar-cost averaging and build significant wealth.
Avoiding Checking Your Bank Accounts
It’s easy to have ambivalence about logging in to your bank account to review your checking or savings balance. This is especially true if you frequently use a debit card and have several pending transactions hit your account all at once.
You may not feel like peeking into your account, but you should get into the habit of checking these accounts daily. It’s important to know how much you have in checking and savings to ensure you know how much money is available to you at all times. This helps keep from overdrawing on any accounts.
Additionally, a vigilant eye on checking and savings accounts may be quick to notice any unauthorized transactions and report them quickly to mitigate any negative effects of fraud or identity theft.
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