5 Common Money Mistakes and How To Fix Them, According to Michela Allocca
Written by
Brooke Barley
Edited by
Cory Dudak
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Michela Allocca, CEO of Break Your Budget and the person making a splash on TikTok and Instagram with her money tips, is known for her compassionate approach to finances.
In a recent Instagram post, she posted a carousel of five fixable money mistakes you may be making, and how they are holding you back financially. Check out her tips to start making better financial decisions.
Asking $5 Questions
It’s a cliche at this point: people have heard that a $5 coffee or $12 avocado toast is what’s breaking budgets. The truth is that’s not really the case. In fact, Allocca refers to questioning these types of purchase as “$5 questions.” Wondering “should I buy coffee today?” or “does adding avocado cost extra?” ultimately don’t matter when it comes to finances.
“It’s ok to be conscious about these things, but not for more than like…5 minutes max per week,” Allocca posted on her Instagram. “Focus your financial attention on the big picture decisions; are you investing? Do you need to automate your savings? What are your financial goals?”
Not Tracking Your Expenses
Allocca recommended that anyone — no matter their income — track expenses. “Tracking expenses is how you draw attention & awareness to your spending behavior,” she posted.
Doing Too Many Things at Once
Getting your finances right can seem like a daunting task, but it doesn’t mean you have to overload priorities. “You do not need to work towards every goal at once,” Allocca wrote. Here’s the list of financial priorities that Allocca said people should work toward one at a time:
- Set up the right accounts (checking, high yield savings, retirement, brokerage)
- Create a budget
- Save your emergency fund (3-6 months of expenses)
- Pay off high-interest debt
- Start contributing to retirement accounts
- Pay off low-interest debt
- Set and save for short-term financial goals
- Invest beyond retirement
Not Having a Central Tool To Manage Money
Getting a tool to organize your finances can make life a lot easier. Allocca said it just needs to be something you will use and you’ll enjoy using. She said that whatever tool you use, make sure it can create a monthly and annual budget, set financial goals and gather insights for decision-making. She recommended The Personal Finance Dashboard.
Focusing on Reducing Instead of Expanding
“You can only cut so much,” Allocca advised. “The very first focus should be on (and will be) reducing your expenses to a point where you feel comfortable. But after a certain point, you can’t cut anything else. This is where you need to turn to expanding.”
Allocca urged followers to think about how they can increase their income, or what actions they can take to expand their ability to learn.
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