1. Not Tracking Expenses

So the first mistake I see pretty often as a financial coach is people who aren’t tracking their expenses. Now, I know what you’re thinking:

“omgsh, this sounds terrible, I don’t want to save my receipts or I hate excel and going through my credit card statements just sounds EXHAUSTING”

That’s definitely not what I’m talking about so don’t worry!

What I’m actually talking about, is just paying attention to your money. Understand how much you are spending on what, and when it happens.

You should know when each of your bills are leaving your account, and shouldn’t ever be surprised by anything that happens in there!

Something I help my clients with is categorizing their expenses in 3 different segments:

1. Bills: These are pretty easy, they come the same time every month, and they’re almost always the same amount. But those other 2 categories can be hard.

2. Day-to-day Spending: Try to figure out how much you spend on a day-to-day basis, like, whenever you swipe your debit card for little expenses, (restaurants, gas, groceries, etc).

Turn that a recurring payment to yourself, so that you always know what you’re spending. That way, you don’t have to nickel and dime every purchase you’re making, just spend within that bulk amount, and you’re on track.

3. Non-recurring Expenses: These are all of the ‘surprise’ expenses we get. Things like, annual fees, or anniversary gifts, or rotating the tires on our car. It’s anything you’re not really thinking about until it’s right on top of you.

Try and do a HUGE brainstorm of all the things that you would reasonably pay in a year.

For example, if you’re part of a professional organization that requires a license, you know you’re going to have to pay for that at some point so start saving for it now.

If you own a car, think about repairs in advance, average the amount that you think you would pay, divide it by 12, and put that into a savings account every month. This way, when those things come around, you’ll be prepared!

2. No Money Plan

- Now, if you’re reading this post it’s likely you don’t even know what the heck a money plan is, so I won’t fault you for this one. A money plan is a direction and structure for your money. Not as a method of control or restraint, but as a method of understanding HOW you’re actually going to reach your goals.

If you want to save for a special trip for example, figure out how much you need, when you need it by, and make it a recurring expense to yourself. Set up a high interest savings account, and start putting in the amount that will help you get there.

It seems really simple, but I can’t tell you how many times I’ve heard a client tell me a money goal, and then have no answer on how they’re going to achieve it!

3. No Reassessment

- A money plan is not a ‘set-it-and-forget-it’ thing. You change, your goals change, your life changes, why shouldn’t your money plan?! You should be checking in at least once every 6 months to see if your plan still works for you. (and if you’re in the beginning stages of creating a money plan, check way more frequently! - Like, once a month!) You’ll want to catch things that don’t work early so you don’t cause yourself stress trying to fit into a ‘mould’ that doesn’t fit with your lifestyle.

4. Budgeting Monthly (instead of by paycheck)

- You don’t get paid monthly so why are you budgeting that way? - of course if you do get paid monthly this totally works for you, but a lot of us are on bi-weekly payments and it can be hard to understand how to fit your money around that. Your money plan should take into account your payment structure and expense dates, when your bills are due, when you need money for certain things etc.. I suggest budgeting per pay period. This way, you’ll know which parts of your paycheck should be allocated where.

5. Budgeting around your ‘ideal’ life rather than being realistic

I’m not saying don’t have ambitions, but be honest with yourself. Don’t make a lofty money plan that has a million immediate changes to your life. NO ONE can make change that quickly. Give yourself some time to rearrange your life into what you want it to be, it will happen, but it probably won’t happen tomorrow.

6. Bank Fees & Crappy Accounts

- At least every year, you should be taking a review of your bank accounts. Are you paying extra fees? Are you getting bad interest rates? Does your credit card have rewards? Are you using them? It’s important not to forget that there are other options out there. Most of us ‘bank where our parents banked’ or keep with the ‘first credit card the bank offered me’. There are constantly deals, promotions and accounts opening up that could fit better with our needs. It’s YOUR money, and you should be keeping it at the institution that fits the best for you.

7. Taking it too seriously

Just Relax.

You’re STRESSED with your money, that’s probably why you’re trying all of this in the first place, but just remember to breathe.

No one is perfect and that includes you! Numbers aren’t everything.

If you mess up, don’t hate yourself for it.

If it’s a one time mistake, you’ll know better for next time, if it’s something that happens too often, then maybe you need to reassess your original money plan and THAT’S OK.

It’s going to take a few renditions of your plan to get something that sticks. Your plan should always be evolving with your life changes anyway!

So those are the 7 mistakes I see most often in finances. Are you making any of these mistakes? Were you already making these changes? Let me know by commenting on this blogpost!

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