Three More Major Financial Mistakes

by mike on April 14, 2011


Last article, I discussed three major financial mistakes.  The mistakes discussed were getting a 30 year mortgage, trying to get rich quick, and not figuring out who is responsible for what.  After looking at the post, I decided it wasn’t extensive enough.  So, here are three more major financial mistakes to avoid if you want to prosper with your money.

1)    Getting in credit card debt. It’s really easy to assume that credit cards are no big deal.  After all, who doesn’t have a credit card?  (for the record, I haven’t had one since about 2004)  The problem is that credit card debt can ruin a marriage.  Money fights and money problems are the number #1 cause of divorce in the United States and it is much easier to have those fights when there is the stress of loads of debt.  It is especially troublesome when just one spouse is running up the debt.  That is a quick path to divorce.   The funny part about credit card debt is that I have yet to meet with anyone who said their plan all along was to get into a bunch of debt.  It usually starts with putting some charges on the card and paying it off every month.  Then an “emergency” comes along and we use the card to pay for it.  Next thing you know, you can’t make the minimum payment.  It can get out of hand real fast before you know what has happened to your financial life.  You must take credit cards very seriously.  The easiest way to do that is to not have one at all.  A debit card will do everything you need.  But, if you insist on using one, use extreme caution!

2)    Buying single stocks.  This is similar to the mistake I covered in my last article about wanting to get rich quick.  I wanted to break it down further and address single stocks specifically.  If you start buying single stocks, it almost becomes a full time job to keep up with them.  There is a reason there are people who are paid to spend their entire working hours studying stocks.  There are professionals for a reason.  You are not smarter than the professionals.  I know you think you are, but the reality is you simply are not smarter.  Instead, invest in mutual funds and save yourself a lot of headache and especially money.

3)    Not teaching your kids about money.  There are numerous ways to go about teaching your kids about money.  I have a preferred way, but don’t’ have the space to get into it here.  The main point is that you have a purposeful plan to teach your kids about money.  Money should be something that is discussed regularly around the house.  It should not be a taboo subject like it is in many households.  The best way for your kids to learn about is for you to talk with them about it.  If your kids don’t learn how to handle money, guess who they will come looking for when they need someone to “help them out a little” when they are grown adults.  One way to harm your chances of building wealth is to perpetually support your grown children financially when they should be doing that themselves.

Avoiding these mistakes is not exactly easy.  In fact, most of them are counter-cultural.  They go against the grain.  That is exactly how you know if you are doing things with money right.  Most people are broke, so if you are handling your money like most people, you will most likely be broke too.  And that is why I am here, I want you to prosper with money so that you can be a blessing to others.

Photo Credit: Eikootje

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