Today I'm going to show you 6 big mistakes that will make it almost impossible for you
to really save money and that will cause you to waste money unnecessarily if you don't
stop them right now.
Do you often run out of money at the end of the month?
Often it's because of the expenses rather than the income that you can hardly save money.
One of these mistakes cost my friend close to $400 every month.
What that mistake was and how he was able to fix it, you'll learn with the 5 other mistakes
in this video.
But before we get to the main topic of the video, first of all welcome back and if you
are new on our channel...
We are the Finance Nerds and we try to help you to fix your finances and spread our knowledge
in saving money, budgeting and investing, and if you like the video and want to support
us, hit the Like button on this video!
Mistake 1: Expensive insurance Everyone knows it, you have an insurance for
the house, for the car, for the dog, for the children, a life insurance, dental insurance
and maybe eyeglass insurance.
That's when the question comes up, "What don't you have insurance for?"
And insurance can cost a lot of money, because once taken out, insurance is part of your
fixed costs, which are debited every month, every quarter, every six months or once a
year.
So are they due at least once a year and the best way to reduce your expenses and have
more money over the long term is to reduce your fixed costs.
And one of the most expensive insurances is car insurance.
This costs an average of $135, which means some pay more and some pay less.
So I'd be interested to know what you pay on average in insurance each month?
Feel free to write it to me in the comments.
Either way, it would be beneficial if you could lower that amount so your fixed costs
go down and you can save more money.
In general, to save money on insurance, you should compare a lot.
Although most insurance companies use the same factors to determine the amount, they
calculate differently, which is why it is well worth comparing different insurance companies
and getting quotes from all of them.
Just by comparing all of his insurances and getting different quotes, my friend was able
to save over $400 a month.
Mistake 2: Impulse Purchases The 2nd mistake many make is to make impulse
purchases.
Impulse purchases are purchases that one has not actually planned for, but which are made
at short notice out of an emotional situation.
Everyone knows the situation when you go shopping hungry.
You go through the supermarket, see all the delicious things and end up with much more
in your shopping cart than planned.
When you get home, you quickly realize that you've actually bought way too much and half
of it ends up in the trash.
But it not only happens in the supermarket that's also when we buy, for example, clothes
or even in the very unusual case a car.
There, the impulse purchases are then rather purchases for better equipment or more extras
that we then buy because we are just in a rush.
As you can imagine, impulse buying makes it hard to save money at the end of the month,
so our goal should be to stop it.
The best way to do that is to keep a budget that is based on your goals.
Meaning, for example, if you want to save $3000, then you budget a certain amount of
money per month that you want to save in order to have that amount of money in time period
X.
Mistake 3: Not paying yourself first The 3rd mistake is not paying yourself first.
If you pay yourself first, i.e. put back the money you want to save, or even put it in
an extra account, then problems such as impulse buying will automatically disappear and it
will no longer be a problem that you don't save enough money.
Because the money that normally goes for everything but your savings is then already gone and
can no longer be spent.
So you already eliminate 90% of your problems.
So if you have your budget and you say for example that you want to save 10% of your
income, you create a separate account at your bank and create a standing order that every
month 10% of your salary is automatically transferred to this extra account.
Mistake 4: Do not have a savings plan at all 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.
Mistake 5: Pay your expenses late ( Buy now, pay later )
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 6: making debts directly after job start
The first big mistake that the middle class makes is directed at young people, but also
at those who are already a little older.
Namely, after the start of professional life and with the first salary, directly take out
a loan and make debts.
I have seen that especially in my environment that many have taken after they have completed
the university and have started to work, directly a loan.
They then directly wanted a new car, a house and of course had to get the latest iPhone.
Because no money was directly there for it, a loan had to be taken up, because "Now you
earn money".
Not only that this is in my eyes a weak character trait to want direct satisfaction, no it is
also by far one of the worst mistakes you can make financially.
There are 3 reasons for this: 1.
you directly reduce your income and can save and invest less
2.
you have the obligation to pay off this sum and if you don't like the job, you are trapped
in a job you don't like just to pay the loan.
3.
you remain inflexible in life.
You only make decisions because you have to pay off the loan.
As an example, this would also keep you from moving abroad for a certain period of time,
even if you would like to.
So what can you do?
Obviously, you should avoid direct gratification and practice patience until you have built
up a financial buffer.
Also, you should avoid consumer debt when you may have been in the job for a while,
because the money you pay for interest should be used for your future!
And if you now want to know 5 more frugal living tips with big impact, watch the video
on the right!
If you'd like your personal finance content daily, follow us on Instagram, Twitter or
TikTok.
You can find the links in the description.
And if you enjoyed the video hit the like button and if you haven't already, subscribe
to our channel so you don't miss out!
We hope to see you in the next video.