Have you ever been shocked when your money was gone out of nowhere in the middle of the
month ? If so, then this is the video for you. We show you 5 really fatal money mistakes
that damage your bank account and literally eat up your monthly salary.
One of these mistakes has such a strong impact on whether you live from monthly salary to
monthly salary or whether you still have money at the end of the month to save, invest or
to fulfill one of your desires. You'll learn about this money mistake today
along with 4 others that will help you have more money left over at the end of the month
and not have any more money worries. And before we dive into the topic : Hello
and welcome back to our channel ! And if you are new here : We are the finance nerds and
on this channel we are helping hardworking people like you to get more out of your hard
earned money by showing you how to use your money in the most effective way. Remember
to give this video a thumbs up at the end, if you got value out of it. And now let's
start with the 5 money mistakes you should avoid at all costs if you never want to have
money worries again at the end of the month. There are so many ways to manage, save and
invest your money that sometimes it's just too much to think of everything. Spending
money is by far easier than managing it well. The good thing is that it is usually enough
to stick to the basics and avoid everyday money mistakes so that you are able to achieve
good results. You don't have to be a math whiz or spend hours on your finances, although
we really can only advise everyone to spend a lot of time on their finances. The best
way to start is to look at where you spend most of your money and where it might be unnecessary
to spend it. After you have identified the most common positions where the most money
is spent unnecessarily and you avoid simple money mistakes, you will very quickly see
positive results and already save a lot of money. Once you've taken this step, you can
go further and get the knowledge on how to use the money you're saving now most effectively,
perhaps to retire earlier, fulfill one of your dreams, or build a financial safety cushion
to cover unexpected expenses. Mistake 1. Not having a plan for your spending
This is probably the biggest and most common money mistake most make. Without a plan for
your spending, it will be very difficult to achieve your financial goals whether you want
to retire early or buy a major purchase. Your spending plan is the basic framework for your
budget, where you want your money to be spent each month, and where you take control of
where your money goes. As an example, if you spend your salary haphazardly each month,
it will go in all sorts of directions without you prioritizing what things are really important
to you. Then your money is no longer really your money, because you spend it haphazardly
and do not have control over it. Many people find it difficult to create a budget, but
it is enough if you know what you spend your money on and divide your expenses into fixed
costs and variable costs and also assign categories to the expenses, such as food, rent, car and
clothing and assign them a percentage of how much you want to and can spend in the month
per category. You will then also realize that in some categories you may be living above
your means and therefore need to hold back in others.
Mistake 2. Pay your expenses late ( Buy now, pay later )
Staying with your spending now, many make the mistake of putting off payments into the
far future because they don't want to confront spending money. This has a big psychological
background. We humans avoid inconveniences and try to postpone them as much as possible.
In terms of your finances, however, this is a fatal mistake that can determine whether
you have money left over at the end of the month or whether your account is in the red.
Because what happens if you keep postponing your payments until later? Exactly you no
longer know from a certain point in time how much money you really still have available,
because your bank account still has enough money right? Then you start to think that
you can still buy this pair of shoes or this decoration, although you don't really have
this money. You create unplanned expenses yourself, because at some point this money
is debited or you have to transfer it and then the money is gone and everyone should
know how unpleasant unplanned expenses can be. Always try to pay your expenses immediately
and avoid "buy now and pay later".
Mistake 3. You don’t define the difference between want vs. need
Again, you have the reference to your spending plan and what I meant earlier about not having
priorities if you don't have a spending plan. Without a plan you can't distinguish what
is really important (your needs) and what is not so important (your wants). You need
to clearly divide your spending between what you really need and what you really want.
This is also the reason why many live far beyond their means. Needs are the things you
really need, like food and clothes. Wants are things that are nice to have, such as
travel. Needs can also quickly become Wants, which is also why many live beyond their means,
for example if you want to buy a house that is way too big for you and your family or
you need to buy a new car but instead of buying a car that fits your needs and income, it
has to be the newest model.
Mistake 4. Do not have a savings plan Not having a savings plan is just as bad as
not having a plan for your spending. If you stick to defining exactly what you want and
need to spend your money on, it also makes sense to include a fixed savings rate. Because
allocating 100% of your salary to expenses not only makes no sense, but is also grossly
negligent. We recommend that you set a fixed savings rate of 10% of your salary and invest
this sum in a separate account. There is a concept of money magnet here and it says that
money always flows to money. To set up such a money magnet, put the fixed 10% into a separate
account and leave it alone, no matter what. You will find with time that the higher the
amount in this account, the more your entire financial situation will change. If you want
to learn more about the Money Magnet concept, feel free to let us know in the comments !
Mistake 5. Grocery shopping without a list So if you're like me, I'm sure you'll go to
the grocery store more often and just have a rough idea of what you want to buy and what
you need. Without any plan, as with your spending and saving, you will have absolutely no control
over your purchase and spend more money than you need to. You will spend money on things
that you won't need later and that will end up in the trash can. You will buy way too
much and half of it will end up in the trash can. So you throw your money in the garbage
can and you would not do that otherwise, right ?
So make yourself a plan beforehand, what you need and want to buy and stick strictly to
it. We've now talked about your spending and your
savings rate, and if you don't have a budget, you don't have control over your financial
situation. You can earn really good money every month, but without a budget you will
not be better off financially. So now let's look at how you can create your
budget in a nutshell. If you want to dive deeper, check out the video where we show
you how to create the perfect budget in 10 minutes. Just click on the video in the top
right corner.
1. collect your paperwork for your finances This includes bank statements, insurance papers
and investment accounts. You will need these to get an overview and to get all the information
you need for the next steps.
2.Calculate your income. Calculate your complete net income.
3. create a list of your expenses You should have already done this through
the previous tips. Categorize your expenses and estimate what you spend monthly on each
category. It also makes sense to include the fixed savings amount.
4. determine fixed and variable costs We have already talked about this as well.
Determine how much your fixed and variable expenses are per month.
5. total your monthly income and expenses If your income is now higher than your expenses,
then congratulations, you have money left over, which you can use for example for your
retirement savings.
6. make optimizations for your expenses If you are in the situation where your expenses
are higher than your income, then you must now look into the categories and make optimizations
and consider in which categories you can spend less.
If you enjoyed the video and now want to know more about how to take control of your finances,
click on the video to the right now or check out the video description. There you will
find more videos and resources to help you have more money at the end of the month.
And hit the like button if you are willing to take control of your finances.
See you in the next video.