Financial mistakes people make

[isthisused]

Instead of saying "budget" to start, I would say tracking expenses; perhaps that's even a different category. I went so long without doing this because the word budget sounded so regimented and boring. A few years ago I was advised to simply track what I spent because my personality type wouldn't stick with a budget for very long. I did that and I do it to this day. I identified things to cut back on or to cut out and never felt bogged down. I suppose it's a budget of sorts but doesn't feel like it.

Yes, you in effect established a basic budget. Add in a few dollars in savings for predictable items that didn’t come up while tracking spending (car tires, vet bills, Christmas & b-day presents etc.) and you have a budget.

[isthisused]

MARRYING SOMEONE WITH WHOM YOU ARE FINANCIALLY INCOMPATIBLE: So many problems and divorces could be prevented if people would consider financial compatibility when choosing a mate. You don't need to be married to someone to know how they handle money. If it is dramatically different than how you handle money, move on. Don't marry them expecting to change them. Don't marry expecting to turn a spender into a saver. It just isn't going to happen.

LOVE IT!

[isthisused]

Why is buying a new car on there? Is it really a financial mistake?

Its not if you are wealthy, But for the rest of us it is. Your Cost of ownership goes down considerably with a used car. Many people assume gas is the #1 expense associated with vehicle ownership, But for most vehicles its depreciation.

[boosami]

Yes, you in effect established a basic budget. Add in a few dollars in savings for predictable items that didn’t come up while tracking spending (car tires, vet bills, Christmas & b-day presents etc.) and you have a budget.

A) Having a budget isn't necessary living within your means.
B) Living within your means mean you internally or exterally "budget" yourself responsibly.

I'd say B is more important than A.

[isthisused]

I would say instead, buying too much car.

Added it as well as leasing a car

[disneysteve]

Its not if you are wealthy, But for the rest of us it is.

I disagree. Again, the problem is buying too much car or a car you can't really afford. Brand new cars in the US start at less than $10,000. If you buy a new car and keep it for 10 or more years, why is that a mistake? Could you save some money by buying a used car? Sure. But a new car, by itself, isn't a mistake IMO.

[isthisused]

I live well within my means, but I do not have a set budget. I save a good deal of my money, but I do not keep track of my expenses day-to-day. You do not have to have a set budget to live within your means, and having a budget does not mean you stick to it! I think a budget is important for most people, but it is not a necessity.

Edit to add more information... Almost 100% of my spending is on charge cards. At the end of the month, I pay the full bill. If there is income left over (most of the time), it is distributed into my various savings and investments. If not, I transfer out of a short term savings fund to make up the difference. I could spend $3,000 one month and $15,000 the next. My lifestyle simply is well within my means, so there is no need to budget. I suppose if I noticed a trend of overspending I would adjust it, but that's pretty far from the types of set budgets I see on this forum.

I would agree with you not being in a situation of not needing a budget. Some people either make enough money or they are frugal enough or most likely a combination of the two, which they will do just fine without a budget(shhh I fall into this category, not that I make a lot, but we live very cheaply). I am more making this list for people who find themselves in financial trouble so that they might use it to help them get back on track...

[disneysteve]

BUYING EXTENDED PRODUCT WARRANTIES: Stores and companies make a fortune by convincing customers to buy extended warranties. They are a very expensive form of insurance against an event that is very unlikely to happen. Most products either fail early on if they are damaged or defective or they last a good long time. The chances of using the extended warranty are very, very small but the cost is substantial. Just say NO.

[isthisused]

I disagree. Again, the problem is buying too much car or a car you can't really afford. Brand new cars in the US start at less than $10,000. If you buy a new car and keep it for 10 or more years, why is that a mistake? Could you save some money by buying a used car? Sure. But a new car, by itself, isn't a mistake IMO.

When you can buy something with 3/4 of its life expectancy for half the price. that is a much better deal than new. You can still add driving the vehicle longer to make it an even better deal. This one may not be worth it for some people to whom owning a new car is an easy purchase, but many people who really cant afford it go out and finance new cars because thats what they think everyone else is doing. We may just have to dissagree on this one. I added leasing to the list

[isthisused]

BUYING EXTENDED PRODUCT WARRANTIES: Stores and companies make a fortune by convincing customers to buy extended warranties. They are a very expensive form of insurance against an event that is very unlikely to happen. Most products either fail early on if they are damaged or defective or they last a good long time. The chances of using the extended warranty are very, very small but the cost is substantial. Just say NO.

YES! ADDED!

[isthisused]

taking risks. buying something when you THINK it will make a return but you aren't 100% sure.

Not sure what you mean here, If you are talking about investments. I have to disagree. Investments that are 100% guaranteed are almost certainly not going to outpace inflation. So in effect. by trying not to lose money you end up losing value of your money.

[tulsa_sr5]

I DESERVE IT/YOU ONLY LIVE ONCE/SOMETIMES YOU JUST HAVE TO TREAT YOURSELF - it's so easy to use this rational to justify charging or going in debt for some big luxury item, but also easy to turn this into a habit. next thing you know it's a constant deal and you are putting every whim on debt.

[Bimmer]

Shopping Addiction (usually women: clothes, jewelry, accessories, etc)

Expensive hobbies (usually guys: car parts, ATV's, hunting/camping gear, electronics, etc)

[maat55]

MARRYING SOMEONE WITH WHOM YOU ARE FINANCIALLY INCOMPATIBLE: So many problems and divorces could be prevented if people would consider financial compatibility when choosing a mate. You don't need to be married to someone to know how they handle money. If it is dramatically different than how you handle money, move on. Don't marry them expecting to change them. Don't marry expecting to turn a spender into a saver. It just isn't going to happen.

Problem is that one can change, later.

[scfr]

Taking out payday loans.

Buying lottery tickets or casino gambling (some will want to add "for any reason other than pure entertainment").

Not having estate documents in order.