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Personal Finance Mistakes- Watch and Learn

20 Apr

When the markets crashed in 2008 it changed a lot of people’s lives. For most, money was tight. People that were once making $100,000 a year selling luxury items were now cleaning toilets at their local McDonalds. At that point a paradigm shift started to occur in our society, and families everywhere started to pull their purse strings closed. They needed to re-evaluate their personal finances and save money. Unfortunately for them, they didn’t know anything about personal finances or being frugal. The door was left wide open for them to make mistakes when they thought they were making sound financial decisions. Luckily for us, we can use their mistakes as examples so we don’t have to make them ourselves.

Mistake 1: Using coupons they didn’t need- When the recession started to occur it became apparent that most of us needed to save money. Companies also saw this so they flooded us with coupons. It became so big that we even have TV shows about (extreme) couponing. Using a coupon is wonderful if it’s used to purchase something you really need. One dollar off a loaf of bread, I’ll take it!  The problem occurs when we use coupons to purchase items that we don’t need. Spending $10 dollars on a 30 pound bag of pop rocks might sounds like a great deal, but what the heck are you going to do with a mountain of pop rocks? That example’s ridiculous, but it happens to me all the time. I’ll think about buying something because I have a coupon even though I don’t really need it. Just because I’m getting a good deal for that product doesn’t mean it’s helping my checkbook!

Mistake 2: Making decisions based on emotions- We can all get emotional when it comes to our finances, and that’s why it’s important to keep an open mind. When the economy was collapsing everyone was trying to protect themselves in any way they could. People were selling all their investments and personal belongings. Others were taking money out of their retirement funds to try and save belongings they really couldn’t afford. Whichever way they were going, a lot of those decisions were rushed. Since 2008 I’ve talked to quite a few people that made rushed decisions and almost all of them regret their actions. Take the investments for example; a lot of them would have rebounded to where they were in 2007, but when people sold them on a whim they sealed their fate of a net loss. I know hindsight is 20/20, but I remember wishing I had money to invest when the markets were crashing. I would have bought B of A. If only…

Mistake 3: Not discussing financial goals- As I mentioned above, after the financial collapse families started to cut back on their spending. From what I’ve seen, most families have one person that deals with most of their finances. That can be a very effective method for money management. If someone is more knowledgeable in personal finance it’s good to let them take the reins. The problem occurs when this person leads their family in a direction that everyone hasn’t agreed on. Having common financial goals is the key to household success, and if you never take the time to set-up these goals you’ll run into trouble. Say, hypothetically, I thought it was important to save money for a family vacation. I mean this whole recession talk has really got me down, and I just want to lie on a beach sipping margaritas. My girlfriend, on the other hand, thinks it’s really important to save money so she can be a stay at home mom. To her, nothing’s more important than spending time with our future children. If I’m the one in charge of our checkbook, but I don’t have a clear understanding of what we both want, I am more likely to take our family in the wrong direction. Once she figures out what’s going on (they always do) we will have major issues. This was a silly example, but when you plug vacation in with keeping your house and trade staying home with the children with paying off student loans it becomes very serious.

 I think most of us read blogs so we can learn a thing or two. The mistakes above were just a few things I’ve noticed since the financial turmoil in 2008. Please share any mistakes you’ve noticed people making since then. If we can all share our observations we might actually be able to help someone!

        

   

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15 Comments

Posted by on April 20, 2012 in Uncategorized

 

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15 responses to “Personal Finance Mistakes- Watch and Learn

  1. Canadianbudgetbinder

    April 20, 2012 at 3:44 PM

    When you talk about the coupons I have to step up and say we are guilty. There were a couple items we purchased with coupons and still have not used.. nothing outrageous by any means. The point still stands that just because you have a coupon doesn’t mean you need 400 of one item. Here in Canada we still have to pay the tax so it all adds up even if it is free in most cases. Not every store here gives us a free product coupon tax free. Every penny counts in the budget… this year we are buying NOTHING of the sorts.. we are stocked for years to come on everything but food. Cheers mate, great post, shared it on FB again! Mr.CBB

     
  2. evdeerly

    April 20, 2012 at 5:27 PM

    Great advice Chris! My wife and I find that most of the coupons we use are for “Health & Beauty” items. Those extreme couponer people crack me up! When you see the inside of their house, half of them would qualify to be on the “Hoarder” shows.

    Take it easy,
    Ed

     
  3. Canadian Performer's Money

    April 22, 2012 at 3:17 PM

    Enjoyed the post.
    #2 is a big one for me. People keep telling me they lost money when their stocks are down and I always tell them they only lost money if they sold and locked in their losses.

    (Is it just me, or does the font size change back and forth on your post?)

     
    • Chris Neighbors

      April 25, 2012 at 10:54 AM

      That’s why I like stocks. Like you said, you can only loose if you sell.

      As for the font, I have no idea why it does that. I normally type the posts and word then past them into wordpress. For some reason the font changes occasionally. You’re not going crazy!

       
      • Jennifer N. Buczynski

        April 26, 2012 at 4:28 PM

        Tip: To keep the font from changing, when you copy it, first paste it into notepad. Or paste it into the wordpress thinger and press the eraser button in “the kitchen sink.”

        Is it just me or did that whole thing sound like it was in code??

        If it was confusing, let me know! Hope this helps!

         
      • Chris Neighbors

        April 26, 2012 at 4:31 PM

        I think if I read through it slowly I’ll be able to get it HA. Thanks for the help.

         
      • Jennifer N. Buczynski

        April 26, 2012 at 4:44 PM

        LOL, sorry it wasn’t better! You’ll get it!!

         
  4. Sort It Canada

    April 22, 2012 at 6:49 PM

    I would say not just coupons, but buying stuff on sale. I know SO many people who have bought TONS of movies because they’re “only” $5 or $10. But those add up! Thanks for sharing 😉

     
    • Chris Neighbors

      April 25, 2012 at 10:52 AM

      I find myslef wanting to buy the $5 movies, but I know they’re probably on Netflix! Thanks for the comment.

       
      • Sort It Canada

        April 26, 2012 at 7:52 PM

        We LOVE Netflix. We don’t have cable (we have an antenna – the free reception kind), so we use it quite a bit. It’s fabulous 🙂

         
      • Chris Neighbors

        April 26, 2012 at 7:55 PM

        Netflix is amazing. I’m hoping they can keep posting good movies and TV shows even though they are losing contracts. I have a feeling they might raise their prices again in the near future.

         
      • Sort It Canada

        April 26, 2012 at 8:16 PM

        I’m in Canada, so I know we don’t have the same selection as you guys in the States, but I can see that happening too. But truthfully, $8 (or even an increase to $12), is still far better than the $60+ for cable 🙂

         
  5. vonlet24

    April 23, 2012 at 7:19 PM

    Great post! I would also add ‘thinking things will get back on track right away’ – I have seen so many people put expenses on their credit cards, for example, thinking that the economy will rebound “soon” and then they’ll be able to pay it off…only the rebound doesn’t come and the debt keeps growing…

     
    • Chris Neighbors

      April 25, 2012 at 10:45 AM

      You’re completely right! I’ve done that myself when I was younger. Thanks for the advice.

       
  6. Jennifer N. Buczynski

    April 26, 2012 at 4:26 PM

    LOL! What the heck ARE you going to do with a mountain of pop rocks! Great question. 🙂

     

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