Good news - it's not too late to fix them.
Most financial advice revolves around roughly the same ideas — avoid consumer debt, save for retirement and don’t waste money. And it’s all very sensible.
However, there are mistakes which on the surface don’t seem so bad, but that can have just as much of an impact on your financial future as what I’ve said above.
None of the mistakes will have a sudden, harmful impact on your finances.
Instead, they’re slow burn mistakes which gently change the trajectory of your life’s journey. As each day passes, you risk moving further away from a better potential future.
1. Not Having Goals
Always have financial goals that you’re working towards. They don’t have to be big goals — something as simple as saving for a vacation or building up $1,000 for a rainy-day fund is enough.
If you’re not always setting and achieving goals of some sort, your money will disappear very easily without you even realizing it. And in reality, there’s always something worth having a goal for.
The other benefit is that it helps you build good saving habits and discipline with your money, which comes in handy for something important like saving a deposit for a house.
2. Focusing On One Thing At A Time
It can be tempting to focus all your energy (and money) towards only one thing at a time and leaving the rest for later. A common victim of this is retirement savings, which takes a backseat to more pressing matters like buying a home and setting up a life for yourself.
But by doing this, you’re sacrificing one of the most powerful tools when it comes to money — time. Specifically, the magic of compounding. When you focus solely on one thing, you’re doing yourself a disservice in the long run, and time is one thing you can’t make up for later on.
This isn’t to say that everything should be treated equally — that’s not realistic. Instead of pushing off some things to ‘tomorrow’ entirely, make them secondary priorities. Give them a little bit of love now, and it’ll pay off in the long run.
3. Not Knowing What’s Important To You
I have a really clear view of what is, and isn’t, important to me. Travel, good food and financial security are important. Things like clothes, drinking and having a car aren’t. And this is reflected in how I spend and manage my money.
Everyone has things that are important to them. The challenge is that many don’t take the time to really think about what they are, and so can easily spend mindlessly on things that actually bring them little to no enjoyment.
There’s no right or wrong, or judgement, on what you hold to be important. It’s your money and you can do what you like with it. But your money is a finite resource, and you should be putting it towards things that add value and enrich your life, and nothing else.
4. Getting Ahead Of Yourself
Planning for the future is a good thing, particularly when it comes to money. But sometimes that leads to solving for future problems — and there’s a difference.
Planning for the future is putting things in place that will serve you well in the future. Solving for future problems is doing things to address issues you don’t currently or may ever have. And in doing so, you’re spending valuable time and resources that could be put to better use elsewhere.
A common example of this is when it comes to couples preparing for a family. Many couples will buy a big house and a family car to future-proof for their soon to be family.
But in doing so, they’re stretching themselves with a larger than necessary mortgage and sinking money into an expensive depreciating asset.
While it might provide some comfort knowing everything is sorted, you’re tying up a huge amount of your money that could be put to better use, and which you may not actually need.
No one knows that the future may hold. And so rather than putting everything you have towards one potential problem you might face, a better strategy would be to put that additional money to work (saving, investing) so that you have full flexibility to take on whatever life throws at you.
5. Waiting For The ‘Perfect’ Time To Start
Making big financial decisions can be scary, and it can be easy for your mind to drift to terrible scenarios that make you feel even worse: “What if I invest my money and the stock market crashes?”, “What if I buy this house and then I lose my job?”
No one knows what the future might hold, and there’s always a chance that the worst-case scenario could happen. But there’s no such thing as a “perfect time” to do something either— you’re not going to get a sign that everything is lined up and nothing can go wrong.
And while you wait for a sign that’s never coming, you’re missing out. The stock market is growing, house prices are increasing, you’re losing time to grow your own business. You’re letting time pass waiting to be told “go” and suffer as a result.
As the classic saying goes:
“The best time to start was five years ago. The next best time is today.”
This isn’t free rein to justify any decision — instead, it’s saying that unless there’s clear evidence it’s a bad time to do something, then it’s probably as good of a time as any to go for it.
6. Not Asking For What You Want
I was talking to a close friend about pay raises and he was frustrated that he hadn’t been offered one, despite feeling like his performance warranted it.
When I asked if he was given a reason, he revealed that he hadn’t actually asked for a raise — he just felt like it was something he deserved.
This one boils down to “if you don’t ask, you don’t get”.
And this doesn’t just apply to your salary, or even work. In all aspects in life, you need to be vocal about what you want. That could be a raise, a seat upgrade on a flight, or a discount on a new refrigerator.
Asking doesn’t automatically guarantee you’ll get what you want. In a professional capacity you’ll likely need to put work into a business case to justify what you’re asking for. But they can’t say yes if you don’t as the question.
If you only wait for what someone else presents to you, you’re closing yourself off to a huge amount of potential opportunities and letting others be in control of what happens in your life.
7. Being Comfortable In Your Job
It’s very easy to become comfortable in your job — you know the work, you know the people, you’ve got stability. But comfort can be a very dangerous thing.
You have a far greater opportunity to increase your salary if you move companies than you do if you stay with the same employer, including promotions in your current company.
Additionally, staying put means you’re limiting your exposure to new skills, experiences and techniques which can help round out your resume and make you a much more attractive candidate for future roles.
If you’ve been in your current role for 2 or 3 years, it’s worth taking the time and at least seeing what’s out there — you don’t know what you could be missing out on.
At the very least, knowing what’s happening in the job market, having an up to date resume and regularly practicing your interview skills are never a waste of time.
8. Not Learning And Developing New Skills
When you’re out of college and into full time work, it can often feel like the learning part of your life is done with. But shifting towards an “always learning” approach can pay huge dividends.
Learning is a skill itself, and continuous learning keeps that skill strong. This could be really important if you need to learn something for a new role or promotion.
The nature of our work is continuously changing and having a broad and diverse set of skills makes you much more employable in a broader range of roles. Anyone in working in a professional capacity should have some basic understanding of things like web development, writing skills and spreadsheets.
You don’t have to become an expert in everything; a little education goes a long way.
Your learning doesn’t always have to be work-based either — picking up a hobby or a creative skill can have just as much of a positive impact, opening you up to new ways of thinking and approaching problems.
Doing so gives you much more flexibility and diversity in an ever-changing economy.
The Key Takeaway
Securing a good financial future isn’t just about your budget and spending — it’s also those small day-to-day life decisions which compound over time and move you away from where you want to be rather than closer to it.
These can be hard habits to break, but worth putting in the effort (and coming back to this list regularly) to make sure you‘re doing as much as you can to secure the financial future you deserve.