According to a recent Gallup poll, 45 percent of Americans say they are spending more than they were a year ago. Most, especially older Americans, attribute the increase to delayed spending on necessities, while millennials are spending more in discretionary categories such as leisure activities and clothing.
Regardless of where in the spectrum you fit, pollsters said, most Americans pay too little attention to small purchases that add up quickly or to common missteps in the way they handle money. Cheatsheet.com’s personal finance researcher Chloe Della Costa cites five common financial mistakes that could be wrecking your budget and putting your future at risk:
- Neglecting to save – Savings are often overlooked by consumers or put off as something to worry about later. But building up a sizable savings account allows you to pay for unexpected medical or other expenses without going into debt, and a life without loans means no monthly payments and more discretionary spending. School yourself to save before you spend.
- Carrying credit card debt – A credit card makes some things easier, like renting a car, purchasing concert tickets, or making hotel reservations. Using credit cards wisely is also a good way to build credit. But resolve to pay off purchases every month, and if you can’t afford to do so, then you shouldn’t make the purchase in the first place.
- Buying too much car – A good, used car will get you where you need to go, and in many areas, public transportation will do that as well, cutting out the need for gas, repairs and more – including a monthly payment you don’t need.
- Making poor college choices – Unless you can easily afford the college of your choice, you can save a lot by choosing a community college for your first two years and switching to a more prestigious college later.
- Buying more than you need – Impulse shoppers won’t like this one, but grocery shopping with a list and asking yourself, “do I really need this?” before making any purchase are good habits that will keep you solvent and out of debt.
By Barbara Pronin