Nobody wants to make mistakes with their finances, but the truth is that it happens all too often. Whether you’re a novice entering the world of personal finance or an experienced investor trying to reach new heights, financial blunders can hurt your success and limit your potential. Understanding how to prevent these missteps from occurring is key to navigating the ever-changing landscape of financial matters. In this post, we’ll discuss 15 common financial mistakes people usually make and offer tips on avoiding them.
1. Forgetting About a Credit Card
One user posted, “Maxing out the credit card at 18 and ‘forgetting’ about it for years thinking it would disappear! Ten years later, still paying the consequences.”
Another user asked, “They never fell off? Damn.”
One user replied, “Lol fell off? You think Visa will just let that ‘fall off.’ Nah. They’re getting their 120 months of 27% interest.”
2. Trusting the Wrong Person
One Redditor shared, “Getting married (the first time) to the wrong person.”
Another user asked, “Ready for round 2?”
One Redditor added, “Yep and trusting him with our finances.”
3. Making Risky Investments
“Lol. I got a home equity loan to buy a racehorse. Boy, I learned a lot on that one, and yes, it was a very painful lesson. I suppose that’s why I’m in much, much better financial shape now, too,” one Redditor posted.
Another commenter asked, “How did the horse do?”
The OP replied, “Didn’t break even.”
4. Impractical College Degrees
One online user stated, “I like college. I just got an absolutely worthless $82,000 no-job degree.”
One user replied, “I would like to tell you that, in my opinion, there is a difference between something you can’t use for monetary gain and something worthless.
“If you can afford the degree and like to learn, it’s not worthless. It’s an expensive hobby. But take a look at other people who enjoy hobbies that might also be expensive.”
5. Purchases You Won’t Use
Another user shared, “I bought a boat. Five years later, I happily donated it to a charity that supports Veterans with PTSD for a $500 tax credit. Never again.”
One user added, “Two best days, the day you buy and the day you rid yourself of a boat.”
6. Marrying a Gambler
One user shared, “Getting married to a gambler.”
Another user replied, “I’m curious…did his/her gambling attract you initially? Like they were a ‘bad boy/girl’? Or was it more of a ‘Yeah, they gamble a bit, but it’s fine’?”
The OP answered, “He played poker with his buddies when I first married him, but only once a month. He hid his gambling addiction when it became severe. He would wait until I was asleep and go to the casinos. I only found out when our mortgage went into foreclosure.”
7. Pulling Money From Investments
One Redditor posted, “Pulling all of our money out of the stock market during the big crash in the 2000s… huge, huge, huge, huge, huge mistake.”
One user replied, “It’s sad that so many people’s gut reaction to market downturns is to pull their money out.
“Everyone can agree that the goal is to buy low and sell high, right? The obvious answer is to invest as much as you possibly can when the market is s- and sell only when it’s hot, but for some reason, human instinct seems to be exactly opposite that.”
Another user confirmed and added, “While I agree with you—I get it when people do this.”
One Redditor also shared his story, “My dad has insisted on investing large amounts in individual stocks as well as moving money around between different companies as a reaction to make news about those companies. He’s not super rich, but upper middle class—the kind of person with no business doing those things.
“When the company I worked for right out of college (a well-known local Fortune 500) missed an earnings estimate for the first time in ages, triggering the stock to tank, he called me asking where he should move that money. I eventually convinced him instead to transfer money into it. He bought it close to the bottom and has made a small fortune.
“A decade later, when another company I worked for, also a well-known Fortune 500, had a significant PR disaster that tanked the stock price, we went through the same dance, and I reminded him of the first time. He again took my advice not to sell it and instead did an equally foolish thing and moved a stupid percentage of his net worth into that one stock, but as a result, made a s- ton off of it.
“The market overcorrects for bad news. As long as the company fundamentals are solid, the market will correct for it.
“For most of us, the best strategy is to consistently buy the entire market through index funds and hold on to them long-term. Anything else exposes the casual investor to unnecessary risk.”
8 Spending Your Whole Inheritance
“It’s a three-way tie: Student loans for a degree I didn’t end up finishing because 1) I’d already gotten a job in that field when I started school, and 2) I quit said job and became a truck driver.
“P-ssing away a low six-figure inheritance on travel, meme stocks, and a BMW.
“Living off of my credit cards for an extended period of time where I was broke and not working,” one Redditor shared.
9. Overpriced Purchases
One user shared, “I bought a set of gold-leafed encyclopedias to invest in my children being able to learn and use them for essays. Shortly after that, the iPhone was released, and the internet was at everyone’s fingertips. By the time my oldest was ready to write school essays, the school told her to use the internet for research. I just moved and had to pack up all of those encyclopedias, 3 of which have been removed from the plastic wrap. All three that were removed were so that I could look something stupid up and feel like they got a use. They are fire starter material now because you can’t even donate them.
“I paid 6k over five years for them, with a small collection of other books that came to ‘sweeten the deal’ from the guy who convinced me to get them. The first time we moved after buying them, my wife’s grandfather saw them and asked why we didn’t just ask him for a set because he had ten sets that he got for under $200 at a library auction.”
Another user added, “My parents bought a set of the Encyclopedia Britannica in the 70s, and I never asked what they spent. I do recall my dad being pretty happy about it because he’d gotten some kind of special deal on them. I rarely used them for schoolwork, but I browsed through them from time to time.”
10. Student Loans
“Student loans,” posted one user.
One user added, “100% going to college f- me financially.”
One user commented, “What did you major in?”
11. Payday Loans
One user shared, “Payday loans. I did it once, and it continued for ten years of being broke. I never quite recovered; I just fell into a lower tier of existence. Still trying to dig my way out.”
12. Waiting For Stocks to Go Up
“Waiting for the stock price to go a little higher,” one user posted.
Another user commented, “‘Buy high, sell low.’ That’s what I always say.”
Another user replied, “I had a situation with crypto that if I sold, I’d profit 15k, thought it could go higher, worth $500 by the end of the week.”
13. High-End Electronics
One user posted, “High-end gaming laptop 4k. Seven years ago.
“It’s not worth it because technology moves fast, and repairs are hard to come by when it’s a limited production. Keep it simple, boys and girls. Good luck!”
Another user asked, “How is it holding currently?
“I also bought a pretty expensive (not as expensive as yours) laptop many years ago. I recently bought another one at a quarter of the price, and it runs games a lot smoother than my expensive older one.”
One user replied, “Not entirely on topic, I know how people feel about Macs, but I bought a MacBook Pro 2018 for about $2500 (maybe a little less, I don’t remember) in early 2019. I’m not a big gamer and use it for work and productivity. I was surprised earlier this year when I installed COD Warzone, which ran well. I know it’s not the most demanding game, but it’s a 5-year-old laptop not designed for gaming specifically.”
14. Plastic Surgery
One Redditor shared, “Breast implants.”
One user seconded, “Same!!!!”
15. Having an Emotional Crisis
One Redditor posted, “Well, not to get into too many details, but earning just over £100k but having a quarter-life crisis (mental health issues) and now in about 40% debt of what I earned…”
What do you think about the top 15 financial mistakes listed above? Do you have more stories to share? Comment on it below!
Source: Reddit.
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