30 Economical Mistakes a Lot of People Commit

29. Never Cosign a Loan

At some point in our lives, almost everyone is going to ask their friends and family if they will be a co-signer. If it’s your own children, the odds are that you are going to say “yes”. However, before you cosign anything, take a step back and examine what that really means. As a co-signer you become equally as responsible to pay back the loan as the person who’s getting the money. So if your friend or family member stops making their payments, debt collectors can come after you. This will also drag down your credit score, as well. If it’s your kids, maybe you’re prepared for that possibility. But a friend or sibling? Not so much.

28. Don’t Buy a Home Too Quickly

When you get married, you may feel a lot of pressure from your family, friends, and spouse to buy a house. After all- that’s what married people do, right? However, if you just got done paying for a wedding, do you really have a lot of spare change lying around? So. Many. People. lost their houses during the 2008 crisis because they could not actually afford their mortgage. Instead of jumping into buying a home, make a budget and a game plan. This way, you and your partner will know a timeline of when it will happen, so there shouldn’t be any resentment or worry. Remember there is no shame in spending an extra year or two in an apartment if it means better financial security.

27. Never Lease a Car

Some people think that leasing a car for a year is a good idea. You get to drive a brand new car, and a year later, you can get another one. However, leasing a car means that your money is essentially being thrown away. After a few years, you cannot sell a car to recoup any of your money. You are also in an endless cycle of handing out a car payment. If you buy a car with financing, you may have it paid in full in five years, and then you get to keep and drive that car for free. (Besides insurance and gas, of course.) On top of that, lease agreements are very strict. If anything happens to the car, you have to pay for the repairs. It is usually far more expensive in the long run.

26. Don’t Make Excuses Not to Save

Everyone has a million and one reasons why they don’t want to save money. They think, “Oh, maybe next month” or “Oh, maybe if I get this new job”. But no matter how much (or how little) you make, there is almost always room for improvement. Even if you just get in the habit of putting your spare change in a jar towards your vacation, a little bit will seriously add up over time.

25. Stop Buying Expensive Coffee

We know. Millennials are tired of hearing this advice. It’s insulting. However, it’s kind of true. Starbucks drinks are around $4 to $5 each, but you can buy a bag of coffee grounds, K-Cups, or Tazo tea bags and make the same exact drinks at home. If you have a goal of saving money, try to reduce the number of times you buy coffee at a cafe. It becomes so much more of a treat if you only buy Starbucks when you are meeting with friends instead of making it a daily routine.

24. Don’t Take Out Social Security Too Soon

In the United States, you have the option to withdraw your Social Security at 62, or wait until you’re 65 or 67. If you take your money out at age 62, you will get 30% less each month. This is a huge amount of money just to retire a few years early. Try to stay patient and wait for your money when you get older.

23. Don’t Move out too Early

After graduating from college, people in their 20’s want to move out of their parent’s houses as soon as possible. They want to be independent and be able to make their own decisions without having their parents nag them constantly. However, if you are willing to put up with all of the negative aspects of living with your parents, it can help to take a lot of pressure off. Rent is around $1,000 a month. What else could you be doing with that money? Instead of dumping that money into rent, you could be paying off a credit card or saving for a mortgage.

22. Never Buy a Brand New Car

Unless you’re a billionaire, buying a brand new car is an awful idea. The value of a new vehicle depreciates by thousands of dollars as soon as you drive it off the lot. In most cases, a new car is all about ego, rather than logic. Instead of doing that, try to find a car that is one or two years old. Former lease models are great, because people keep them in like-new condition, and the mileage is usually only around 10,000 miles. So it’s like getting an almost-new car for a fraction of the price.

21. Don’t Choose a College Just Because it’s Fancy

In certain social circles, there is an expectation that you (or your children) should go to an Ivy League school if you want to be successful. Or, you may feel pressured to go to a private school to be better than your friends. In reality, a public school can be just as good. Do some research to see which public schools specialize in certain programs. You may be able to find a great program for a fraction of the price.

20. Never Lend Money to Friends

Sometimes, lending money to friends can be a good bonding experience. It shows that you care and trust one another. However, there are certain friends that are total leeches. Or, they will forget to pay you back, argue over the amount that is owed, etc. If you have a friend who you are aware is a total leech, you need to start saying “no”, or come up with an excuse as to why you cannot pay for them. If they are truly your friend, they will understand, but if they’re just using you for your money, it will become apparent very quickly.

19. Don’t Sell Your Stocks When the Market is Down

A lot of people hold stocks as part of their portfolio, but few people actually study the market. It’s very easy to get emotional if you don’t have experience, and you begin to check stock prices every day. Some newbies sell a stock as soon as it goes down, and they actually lose money. Everyone is afraid that there will be another Great Recession. However, it’s totally normal for the stock market to go in cycles of low and down times, called “bear” and “bull” markets. No matter how bad a dip in the price may seem, the stocks will usually rebound, unless the company you invested in is completely going out of business. You should sell when you may a profit, not a loss.

18. Never Buy Things Just to Impress Your Friends

Peer pressure is very real, even for adults. And if you hang out with a group of friends who go out to eat, have expensive vacations, and buy designer clothing, you might feel obligated to do the same thing in order to keep up with their speed. However, real friends won’t expect you to spend a ton of money in order to hang out with them. Next time you feel pressured to buy something, learn how to say “no”, if you really cannot afford it.

17. Don’t Push Off Paying Your Debt

Millennials have more debt than any other generation that came before them. Sometimes, it can feel so overwhelming, that we want to pretend like it’s not happening. People will give the minimum payments on their credit cards, and opt to buy a new car, instead. However, don’t let this debt linger for too long. Interest will continue to pile up over time, and the problem will only get worse. Make a budget and a real effort to pay off credit cards in full, or at least over-pay each month until it’s gone.

16. Never Become a Financial Pushover

Unfortunately, a lot of people fall into a situation where people in their lives are trying to control their finances. Most often, this is a spouse, parent, friend, or sibling. If you are married or in a financial relationship, those decisions should be made together. One person should not be bossing the other around. There is also a form of financial abuse among spouses. If you are afraid that you might be experiencing financial abuse, check out this article from VeryWellMind.

15. Don’t Put all your Eggs in One Basket

Sometimes, people will get really excited about a certain stock or investment opportunity, and they will invest 100% of their savings into it. The problem with this is that if something goes wrong, all of your money can be gone in the blink of an eye. Diversity your investment portfolio so that you always have something to fall back on in case one of your plans doesn’t pan out the way you want it to. Check out this 4-step guide on how to diversify your portfolio.

14. Not Taking Full Advantage of Employer Matching 401K Plans

If you have a full-time job, your employer may offer to match your 401K contributions. When people are in their 20’s, they sometimes decide to push off contributing until later, or they decide to give the least amount possible. If you truly want to save as much as possible for retirement, you should take advantage of the 401K plan by paying out the maximum amount. After all, it’s like leaving free money on the table that you could have gotten from your employer.

13. Don’t Take Out a Reverse Mortgage

There are so many commercials on TV that advertise reverse mortgages. This is an opportunity for older people who own their house outright to take a loan out against the deed of their house. Some people choose to do this in case of emergency, or they think it’s a good solution for early retirement. In reality, many older people fall into a trap and end up losing their house.

12. Never Stay at a Job You Hate

Sadly, there are so many people out there who stay at a job that they hate, because they feel like they have to. In reality, working a job you hate means that you probably aren’t very productive, which means you won’t get promoted. And being miserable can lead to impulse spending, weight gain, and so much more. Instead of dragging yourself into a place that your despise, ask yourself the following questions: Why do you hate your job? What is your “dream” job? And how difficult is it for you to achieve your dream? Start working towards your goals, instead of loathing your current situation. Even if it takes years, you will look back and feel so much happier knowing that you may an effort to change for the better.

11. Don’t Buy Things You Don’t Actually Need

On Instagram, Twitter, and TV shows, we see things that make us want to spend money. Whether it’s cars, clothes, makeup products, or purses, everyone has their vice that they feel tempted to blow their whole paycheck on. If you want to grow your wealth, you need to take a step back and ask yourself- “Do I really need that? Or do I just want it?” Nine times out of ten, the answer is that you want it, rather than need it. Take a deep breath, and try to resist the temptation. Remind yourself of all of the amazing things you will get in return, like being debt-free.

10. Early Retirement is Overrated

Tons of people have a dream of retiring early. There is even a financial guru, Mr. Money Mustache, who retired by age 30. For some people, this has evolved into the idea that retiring early and success go hand-in-hand. This couldn’t be further from the truth, and it may only lead to feeling terrible about your own life. It is much better to have a career that you love so much, you could keep doing it until the day you die. There is so much truth to the phrase that “if you love what you do, you never work a day in your life.”

Still convinced that you want to retire early? Keep in mind that the sooner you retire, the more money you need to survive. If you wanted to retire early, you would need millions of dollars to do so. Even if you could, would you really be happy? Sure, doing nothing might seem fun, but after a while, it gets incredibly boring and depressing. Fishing gets old after a while.

9. Don’t Forget to Write a Will

Most people do not even consider writing a last will and testament until they are in their later stages of life. However, if you own a house or any other significant assets, it is a good idea to write a will. Thankfully, you don’t need a lawyer to get this done. Look up tutorials on how to write your own will in your home state so that it is legally binding. You may need to get a notary at a bank or court house to witness the signing of your will, as well.

8. Never Blindly Trust a Financial Advisor

You should never give a financial advisor complete trust over your bank accounts and investments. No matter how honest they may seem, and no matter how great their reputation is, there is a still a chance that they can rip you off. Ever heard of Bernie Madoff? He was a financial advisor who stole millions of dollars from celebrities. Yes- it’s good to get advice from an accountant sometimes. Just don’t stop checking in every once in a while, and ask questions.

7. Don’t Skip on Life Insurance

When you are in your 20’s and 30’s, you may think that you don’t need life insurance. When you’re young, it kind of feels like you might live forever. In reality, anything can happen at any moment. If you have children and a spouse, it’s probably time to get a life insurance policy. The younger you start a policy, the better off you actually are. If you are healthy, the monthly payments will be very cheap. Once the policy is paid for, you can have peace of mind knowing that your family will be okay.

6. Never Miss a Credit Card Payment

Missing a credit card payment is one of the worst things you could do. Interest rates might go up, there may be a late fee, and it will remain on your credit report for a long time. Unfortunately, a lot of people don’t have their priorities straight, and they ignore a credit card bill for months at a time. Credit card companies can take you to court and even garnish your wages. So please, whatever you do- get your cards paid off as quickly as possible, and don’t miss a payment.

5. Don’t Choose Investment for the Wrong Reasons

Unfortunately, so many people jump into an investment because everyone else is doing it. Remember when Bitcoin jumped up to $20,000? So many people were rushing to buy some without fully understanding the value or utility of crypto currency, and everyone who invested got burned and lost money. Before you invest in the stock market, take some time to do market research.

4. Never Pick a Pointless College Major

Sure, it’s important to follow your dreams. However, not every dream requires a college degree. And some majors are truly a one-way ticket to debt, without many career prospects. If you are still young enough to choose college majors, or if you have children entering college, make sure you do your research on the job market. Seek mentors. Find out what work opportunities are out there. Is the amount of student loan debt truly worth it?

3. Don’t Retire Before You’re Ready

Some people think that they should absolutely retire at age 65, no matter what. If you do, that’s fine, but most people quickly realize that social security payments are hardly enough to survive. Many retirees choose to do what’s called a “second career”, where they find a job that they enjoy doing. This is great, because you can still bring in some additional income on top of receiving your social security payments.

2. Never Live Outside of your Means

You have probably heard this advice a million times, but it is absolutely true. So many people fall into the trap of taking out a credit card or loan to buy things they want, even if it means financially struggling for the next few months. Try to never spend more money than you actually have. Before you buy something, ask yourself if you can wait a month or two to save up your money to use cash, instead of putting it on credit.

1. Don’t Buy a Boat, RV, etc.

Back in the 1980’s and 90’s, almost every dad bought a boat or an RV. It was one of those status symbols for families to have “made it” in America. However, many people realized that it was a ton of work to move, store, and pay for these items without a lot of reward. According to BoatUS.com, Millennials are buying far fewer boats than previous generations. Most people in their 20’s and 30’s realize that they do not need to own a boat in order to participate in the sport. You can rent a boat from a yacht club, or spend time sailing with friends.