Are You Making These 6 Common Financial Mistakes?

Podcast Transcription

Money Talk is a podcast brought to you by PFCU where we will share tips and tricks and talk to the experts on all things finance related. Join us as we cover everything from credit and loans to cyber security and careers. No matter where you are in life, PFCU is here for you.

Hey everyone, welcome to another episode of PFCU’s Money Talk podcast, I’m your host, Maddy. Summer is here, at least spring is here. The sun is shining, the weather has been somewhat beautiful and I thought this would be a good time of year as we start gearing up for vacations and spending money, maybe buying a house, that I would cover some financial mistakes. Now everybody makes mistakes and that includes with our finances. It’s super easy to fall into certain money pitfalls and we want to make sure that you’re avoiding these where you can. And keep in mind that these are common money mistakes which means that if you’re making any these mistakes, you are certainly not the only one.

Mistake #1: Buying too much house

This one is one that I often hear about and saw listed everywhere as a common money mistake- buying too much house. And I will tell you that when we were house shopping and getting preapproved for our mortgage, I can definitely see how people fall into this one pretty easy. Oftentimes people get approved for a mortgage that’s well above what they can actually afford. Getting approved for a certain dollar amount for a house does not mean that you have to or even should use it all. Remember that buying bigger means paying more in taxes, more in utilities and obviously a larger mortgage payment that might stretch your budget more than you’d like. A general rule is that you should not spend more than 30% of your income on a mortgage or rent payment. Make sure that you create or update your budget before you go house hunting, so you know what you’re comfortable spending regardless of how much you get approved for.

Mistake #2 is not saving or investing

We all know that life is just plain expensive from bills and debt payments to childcare and groceries- many people live paycheck to paycheck, in fact, nearly half of Americans do. Paying bills and taking care of your needs is so important but saving for emergencies should be just as important. Having an emergency fund of at least 3 months of your expenses can make a world of difference if you have an unexpected bill or cost come up or worst case scenario, you lose your job and have no income. It can be the difference between being able to cover your expenses and digging yourself into debt or even not being able to pay your bills at all.

Not investing in retirement is another money mistake that you want to try to avoid. You can definitely start small and to make your life easier, you can have savings for your employer 401(k) or IRA come out of your paycheck automatically. Start making your money work for you so you can someday retire! Which I think the majority of us, if not all of us, want to do someday.

Alright, mistake #3: not budgeting or planning

No, making a budget isn’t the most fun thing you could do with your time however, not having a budget can lead to overspending, unnecessary debt or paying for things that you don’t need or are even use, like subscriptions or gym memberships. Creating a plan for your money is going to not only help you track your spending and make cuts where needed but it will also allow you to set a plan to reach the goals that are most important to you. Those goals of buying a car, buying a house, taking a vacation, saving for your kid’s college. Budgeting is going to help you reach those long-term plans that you have.

Mistake #4: Not checking your credit report

We talk about this a lot, you want to make sure to check your credit report regularly which you can do for free at annualcreditreport.com every 12 months from each of the 3 credit bureaus. Make sure you’re checking your report for mistakes and most importantly, fraud. A criminal stealing your identity can really affect your credit which in turn affects your rates and your ability to even get credit. So, you want to make sure there’s nothing on your credit report that’s going to be affecting your finances.

Mistake #5 is overspending and impulse buying.

This is so easy to do especially with how easy it is to online shop and that instant gratification and I have been guilty of this. It feels good to buy the things that you want and it’s okay to buy the things that you want sometimes. But that’s why budgeting is so incredibly important, you want to know what you do have to spend and use the money allocated for the things that you want rather than using money that’s supposed to be in your savings or going towards your mortgage or whatever it might be. And here’s a tip for you and I’ve said this about bigger purchases, but I think it would also even work for smaller buys- and that’s to take a step back. Wait a day before making that purchase, at least a day before making that decision. Get clarity on if you really need it, if it fits into your budget and if you really are going to use it to make it worth the money that you’re spending. Take impulsiveness out of your spending decisions. That’s really going to help you save money and buy things that are actually worth it.

And the last mistake, mistake #6 is using credit cards too much.

Now, credit cards don’t have to be an evil when used responsibly, they’re a helpful financial tool to have in your toolbelt. However, relying on credit cards can be a slippery slope of debt and interest payments. So, be careful not to become financially dependent on credit cards.

Now, if you are experiencing or have made any of these financial mistakes, there are resources available to help you including PFCU’s free financial coaches. You can call our number at 844-517-3611 or email pfcuinfo@pfcu4me.com to make an appointment. See you next time!

Money Talk is a podcast brought to you by PFCU. PFCU offers many products and services to fit your needs. From our various loan and account options to our team of financial coaches to help you reach your goals. Make sure to take advantage of the many conveniences PFCU offers, such as the mobile app, mobile wallets, bill pay, and more. Visit our website at pfcu4me.com to learn more. PFCU is an equal housing lender and is federally insured by the NCUA.