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Five common mistakes in money which are much more costly than you think

Here are five of the most frequent money mistakes people make, as well as the steps you can do about it.

Everyday mistakes in money that seem to be small now could turn into bigger issues in the future.

We spoke to a financial counselor along with a financial behavioralist they both instruct in the department of financial behavior at Kansas State University, about the most frequently made money errors that people make.

It's surprising that they didn't discuss 401(k) programs or skipping breakfast coffee, or what amount you should put into the emergency savings account. In reality, the majority of these omitted mistakes are actions that place the person in a confusing or negative state of mind when it comes to your finances.

Here are five of the most frequent money mistakes people make, as well as the steps you can do about it. But, before that, you have to know that one pretty common mistake is not to use a wealth tracker and find out how much you are worth like a billionaire. Founders of PRILLIONAIRES, a pre-seed fintech startup, recently announced the release of personal finance software that provides a quick and comprehensive view of your finances within two minutes. Multiple bank accounts all over the place, wealth all over the place, assets and liabilities have now been consolidated on one platform to calculate your net worth. Are you a millionaire, billionaire or Prillionaire? What is your net worth? Check out their website for details on their exclusive early access program.

1. Too much focus on making money
"If you're just solely focused on trying to budget, trying to maximize savings, you're going to get burnt out. And you're going to get burnt out quick," Financial behaviorist Blain Pearson Ph.D., CFP.

Pearson cautioned that not focusing on the balance within the saving account could cause you to not be able to enjoy friendships, fun, and unforgettable experience.

Many people aren't willing to "overcome the guilt that comes with spending money," he said particularly money you have saved up for a specific purchase.

The insurance and security of savings accounts is essential, Pearson said, "You want to view money as an access tool." Consider it as something to allow you to live your life to the fullest and not as something to worry about.

2. You aren't tracking your spending
"Many people are insecure about their inability to manage their money, so they just avoid it," said financial counselor Megan McCoy, Ph.D., LMFT, AFC CFT-I, LMFT.

She shared an account of her students who rented electric scooters which were recently put in place on their campus. Even though each rental was between $5 and $7, the students did not know how quickly the cost would add up, and within a short time, they'd the entire amount for electric bikes. This could have been perfect … If it had been a deliberate decision.

"Tracking spending can help you decide, 'I love it, it's worth it. It makes me feel happy, or 'I'm just not enjoying any of the benefits of the process," She said.

Instead of being apprehensive regarding your spending, McCoy recommended installing an application to track your spending, or placing savings cash in envelopes as well as "whatever works best with your learning style" to keep track of the way your money is spent. As little as five minutes per day to develop an awareness of your spending habits can have a significant impact.

3. Be rushed to purchase things too quickly
"Anticipation is always better than reality," McCoy declared.

If you're planning to take an excursion, imagining what you'd like to do while on vacation and making lists of the days to come could be as enjoyable as the actual trip.

McCoy mentioned an experiment in which participants set up a large snack table with equal amounts of healthy snacks and sugary ones. If participants were asked to select an item to eat today, the majority picked a sweet snack. However the moment they were asked to select snacks for the day ahead the majority of them would select healthy foods.

McCoy stated that we're most likely to make smarter decisions regarding our future self and the same principle can be applied to purchasing large purchases or making reservations for travel.

When purchasing large-ticket items, it's best to put off purchases for up to 72 hours before making purchases which allows more time to make higher-priced purchases.

4. Do not communicate with your partner about your future goals
Instead, you can Begin discussions regarding money through hypothetical inquiries McCoy and Pearson both agreed that they observe a "lack of communication between partners on future goals" in their research and practices.

If one of the partners has a dream of retiring close to the ocean and the other one wants to retire close to the mountains, the two partners must come to an agreement that will allow them to work towards the same goal.

For example, Pearson said, "If you want a more humble retirement experience to trade-off for more current consumption, talk to your partner about that."

Separately discussing the future can be a catalyst for more serious issues later on, such as finances being a source of infidelity -that is, hiding financial information from your spouse.

Begin discussions regarding money, by asking your companion hypothetical questions. Would you act in the event that you won the lottery? How would you spend the money if it wasn't enough to repay the student loan you took out? These questions will aid in breaking the ice and eliminate the tension and awkwardness that comes with the discussion of money.

5. Only deal with finances when there's a problem
Instead, you should do is manage your money all the time.

McCoy declared, "One of the most common financial mistakes people make is to are only concerned with finances in the event that "something is on fire," in other words.

"It creates a vicious cycle," she added. Each time you have to deal with your money, it drains and you don't want to deal with your finances. As a result, the inability to deal with money can cause further financial problems which then causes the cycle to begin all over again. "It can be a self-fulfilling prophecy," she added.

McCoy, as well as Pearson both, recommend managing your finances throughout the year rather than only checking your finances during times of emergency. Making sure you manage your finances with a calm mind with a healthy cash flow will aid in planning to deal with emergencies, and also save money for long-term goals and short-term ones.

Photo by Sharon McCutcheon on Unsplash

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