5 Money Management Mistakes You Should Avoid

Money management tips are dime a dozen. Search on Google with the keyword “money management” and see how many results instantly pop up. With so many tips out there, why do people struggle with managing money?

In this article, I’ll explain why. If you have failed to manage money in the past and never really figured out what you did wrong, read this article to the end.

Money Management Mistakes

Practice and diligence

The importance of the two cannot be overstated. You can’t master anything without practice and diligence. Whatever task you take up, no matter how big or small, without practice and diligence, chances of achieving success are slim.

Most people lack diligence. Money management tips don’t give results overnight. If you are following these tips, be patient. These tips work but only when you diligently follow them for over a long period of time.

Practice requires patience, which many people lack. They start out with enthusiasm but begin to lose it after a few months or so. This way, the effort they put in the beginning go to waste. Seeing their efforts not yielding rewards, they blame the tips. In reality, the tips failed because of their lack of patience, not because of outside factors.

The need for customization

The adage “not every shoe fits every foot” is extremely relevant when it comes to money management. Someone might have benefitted by following a particular strategy, doesn’t mean you’ll benefit much the same way. Hence, the need for customization.

Money management tips are mostly generic. Customization makes them personalized. How to personalize money management tips? Simple. Pick generic tips and then tailor them according to your earning ability and professional background.

Not every tip is useful for everyone. Saving tips would be useful to someone who makes a ton of money but doesn’t plan the future ahead. But people living hand to mouth would find those tips useless.

So before you complain that money management tips don’t work, make sure you didn’t follow generic tips but customized ones.

Not considering crisis situations

Ever seen someone, in the wake of a crisis, lamenting that their lives were great until the crisis threw everything off the track? I have. And I felt sorry for them.

I tried sympathizing with them, but a part of me held them accountable for their misery. Those people planned their future ahead without considering what’d happen in the event of a crisis. The lesson to be learned from this is that no matter how good of a planner you are, an act of God can make a mess of all your plans. Keep this in mind at the time of making financial plans, especially long-term plans.

Always save for rainy days. And learn to keep your hands away from the rainy day funds. I am not saying that by doing this, you could get yourself out of the hock. I am saying that you could greatly minimize the chance of your finances falling off the cliff in the event of a crisis.

Don’t follow conflicting ideas

It’s a general rule of thumb that the simpler and concise a strategy, the quicker you can expect results.

Money management strategies are aplenty. Following each and every one of them is impossible. Sure, the thought of adding more arrows (strategies) to your financial quiver sounds tempting, but it ultimately leads to a discordant mix of ideas. Instead, if you stick to one or two strategies, you’d get better and quicker results, and more importantly, understand the whole process of how you are getting results.

That’s one reason money management tips fail. People often lack the ability to select one strategy and discard other strategies. It’s so darn hard for them because they find multiple strategies useful and couldn’t make up their minds about which one to follow.

This is a rookie mistake. Look out for it if you are new to managing money.

Following non-actionable strategies

Following a non-actionable strategy is as good as following no strategy. Simply reading or listening to a strategy, and memorizing it is not enough. You need to put the strategy to use to see whether it secures the result you want.

The problem is you cannot put all strategies to use. Not every strategy is applicable. Tracking essential expenses, for example, is one strategy that falls into the non-actionable category. Why is it non-actionable? Because you cannot stop these expenses. Making a list of necessary expenses, therefore, is pointless as you can never cut down on these expenses.

One reason people fail at managing money is that they follow strategies that aren’t actionable. Those people must realize that they are at fault for choosing an incorrect strategy, and rectify their mistake.

Summing up

Follow all the strategies shared here, and let us know the result. And of course, don’t forget to experiment with them. Maybe by doing this you could come up with an even better strategy.

Leave a Reply