5 Stupidest Money Mistakes You’re Making This Year and How To Turn Them Around

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Though money makes the world go ’round, it’s surprising how little people actually know about it. Whether through ignorance or avoidance, many are making financial errors that could result in everything from monetary losses to imperiled future prospects.

GOBankingRates chatted with money experts to uncover some key money errors and best figure out how to right those wrongs.

Also see four money mistakes the wealthy never make.

Accumulating Too Much Credit Card Debt

Credit card debt is especially expensive, according to Richard Barrington, financial analyst for Credit Sesame.

“The average credit card rate is more than 10% higher than the average personal loan rate, and more than three times the average mortgage rate,” he said. This can make it hard to pay back. And, therefore, it can result in individuals carrying around credit card debt and accrued interest for the long term.

“Your goal should be to minimize interest charges by reducing your balance as quickly as possible,” Barrington said. Unpaid balances can negatively impact credit scores, so work to pay them off as quickly as possible.

It may be best to stop using the credit card entirely if payments have become unaffordable. Another option is to try to refinance into lower-cost alternatives.

Not Saving For Retirement

Many tend to think that if they can’t save much for retirement, they may as well not save at all. But small, incremental contributions really do add up, especially early in one’s career when they have a lot of time left, as that money can compound. The more one starts saving now, the less they will have to later on.

According to advice from Fidelity, the goal is to save at least 15% of income per year in a tax-advantaged account. And that includes a match from employers. If 15% isn’t feasible, start with what is feasible and gradually increase when possible.

Chasing Short-Term Investment Hype

Paul Gabrail, founder and host of Everything Money, said that one of the most common money mistakes he is seeing is young or inexperienced investors chasing the hype of a rising stock as opposed to understanding “the basic fundamentals of why a stock will perform a certain way over the long term.”

Gabrail explained that short-sided mistakes like that can cost a lot of money. Instead, he recommended focusing on education and learning the basics of the stock market as opposed to falling victim to greed and fear.

Spending Too Much on Housing

According to the National Foundation for Credit Counseling, a good rule of thumb is to never spend more than 30% of one’s gross monthly income on housing costs. Doing so could lead to trouble paying other bills or saving money.

Instead, living with family or roommates can be a savvy move until finances are more stable. For those who’d rather live on their own, consider looking for promotions from landlords or trying to secure a lower interest rate, per Fidelity.

Paying For Subscriptions You Don’t Use

Most people would be shocked to learn that subscriptions and memberships for streaming services, websites and gyms they stopped using months ago are still routinely pulling money from their accounts. This could be the equivalent of tossing over $1,000 annually out the window. So a little vigilance could go a long way.

Prosper recommended checking bank accounts regularly and making note of recurring payments. There are also subscription-cutting apps that can help track recurring charges and make it easier to unsubscribe from unused services.

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