5 everyday money mistakes that are worse than you might think (2024)

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• One of the most common money mistakes is the inability to enjoy your hard-earned money.
• Some people become so insecure about managing their money that they stop tracking their spending completely.
• Financial infidelity, or lying to your partner about money, can snowball into larger problems later.
• Read more stories from Personal Finance Insider.

Everyday money mistakes that seem small right now can snowball into larger problems down the line.

We asked a financial therapist and a financial behaviorist, who both teach at Kansas State University, about the most common money mistakes that people make.

Surprisingly, they didn't talk about 401(k) plans, skipping your morning coffee, or how much you should keep in your emergency savings fund. Instead, most of these overlooked mistakes are behaviors that put you in a vague or negative mindspace when dealing with your money.

Here are the five most common money mistakes that people make, and what to do instead.

1. Focusing too much on saving money

What to do instead: Make space in your budget for comfort spending

"If you're just solely focused on trying to budget, trying to maximize savings, you're going to get burnt out. And you're going to get burnt out quick," said financial behaviorist Blain Pearson, Ph.D., CFP.

Pearson warned that focusing too much on the number in your savings account can cause you to miss out on social connections, fun, and once-in-a-lifetime experiences.

People don't take time to "overcome the guilt that comes with spending money," he continued, especially money that you saved for a special purchase.

While having the insurance and safety net of a savings account is important, Pearson said, "You want to view money as an access tool." Think of money as a tool that enables you to enjoy life, instead of something to obsess over.

2. Not tracking your spending

What to do instead: Look at the numbers for five minutes every day

"Many people are insecure about their inability to manage their money, so they just avoid it," said financial therapist Megan McCoy, Ph.D., LMFT, AFC, CFT-I.

She shared a story about her students renting electric scooters that were newly installed on campus. Even though each rental session was only $5 to $7, her students didn't realize how quickly it added up, and, soon, they had spent all of their money on electric scooters. That would have been fine ... had it been a conscious decision.

"Tracking spending can help you decide, 'I love it, it's worth it. This makes me happy,' or 'I'm not getting any joy out of this," she said.

Instead of staying in vagueness about your spending, McCoy suggested getting an app, or putting cash savings in envelopes, or "whatever works best with your learning style" to watch how where your money goes. Spending as little as five minutes a day cultivating awareness around your spending can make a huge impact.

3. Rushing to buy things too fast

What to do instead: Sleep on it

"Anticipation is always better than reality," McCoy said.

If you're booking a trip, daydreaming about the things you want to do on vacation and counting down the days may be just as fun as the actual vacation.

McCoy referenced a study where experimenters filled a large snack table with equal parts healthy snacks and sugary snacks.When participants were asked to pick out a snack for right now, most people chose a sugary snack. On the other hand, when participants were asked to pick out a snack for tomorrow, they were more likely to pick healthy snacks.

McCoy said that we're more likely to make better decisions for our future selves, and that the same mentality can apply to making big purchases or booking travel.

When buying big-ticket items, it helps to wait 24 to 72 hours, giving more time for more expensive purchases.

4. Not communicating with your partner about future goals

What to do instead: Ease into conversations about money by asking hypothetical questions

McCoy and Pearson agreed that they see "lack of communication between partners on future goals" in their practices and studies.

If one partner dreams of retiring near the ocean, and the other wants to retire near the mountains, both partners should come together to find a compromise so they're working toward the same goal together.

For instance, Pearson said, "If you want a more humble retirement experience to trade off for more current consumption, talk to your partner about that."

Being on separate pages about future plans can plant seeds for larger problems down the road, like financial infidelity — the act of keeping financial secrets from your partner.

Ease into conversations about money by asking your partner hypothetical questions. What would you do if you won the lottery? What would you do with your money if you didn't have to pay back your student loans?These questions can help break the ice, eliminating the awkwardness and tension in talking about money.

5. Only dealing with finances when something's wrong

What to do instead: Manage your money all year round

McCoy said that one of the biggest money mistakes is when people only deal with finances when "something is on fire," so to speak.

"It creates a vicious cycle," she said. Every time you deal with your money, it sucks, so you avoid dealing with your money. In turn, not dealing with money causes more financial distress, and the cycle starts all over again. "It can be a self-fulfilling prophecy," she continued.

McCoy and Pearson both suggest managing your finances year-round, instead of only looking at your money when there's an emergency. Dealing with finances in a calm headspace with ample cash flow can help you plan ahead for emergencies and save for short-term and long-term goals.