Everyone makes mistakes with their money from time to time. The faster you can change course, the better.

Saving

Forgetting to save for seasonal expenses

Christmas and back-to-school time are notoriously expensive for families. While many people choose to charge the costs to their credit cards, others put aside a small amount from each paycheck throughout the year to cover seasonal expenses.

Even if you simply put five dollars into an envelope every time you get paid, you’ll have some cash set aside to help take the edge off these expensive seasonal expenses. Think about the two or three times each year that you struggle to stay within your budget. Perhaps all your car license fees come due at once or you have large home maintenance costs every spring. Put away a small amount of money every month year ‘round to take the sting out of these predictable costs.

Investing

Investing in something you don’t understand

It’s possible to have a stable financial life without ever investing in something that you find confusing or overwhelming. Never take the word of someone who will make money off your decision to invest with them. In this age of technology and information, you have the power to learn about any subject. There are plenty of investment options that are simple, straightforward, and reliable.

Investing in life insurance

You need life insurance if anyone depends on you for financial stability. You need a life insurance policy that’s separate from your employer in case they go out of business or you lose your job. You do not need to pay the high fees and commissions that come along with whole or universal life insurance.

Buy a term policy from a reputable company. Rates are low right now and you can invest the savings in your 401(k) or a money market fund and make more money than you would if you tried to use life insurance as an investment.

Working hard to beat the market

Watching your investments closely can backfire. Even seasoned investors who try to beat the market often fail. Unless it’s simply a hobby and you limit your losses while protecting your savings, it’s best to take a hands-off approach to investing past the point when you choose where to put your money.

Spending

Not shopping around for the best price

Competition in the world of retail is intense, and shoppers have the power of technology on their side. Use price-matching, seasonal sales, and negotiation to make sure you get the lowest prices.

Most retailers will price match purchases. Use your smartphone while you are in the store to check the retailer’s website. If they offer the same item at a lower price online, ask them to match that price in the store. Buy seasonal decorations right after the holiday and pack them away for next year’s festivities.

For everyday purchases, Amazon Prime customers can use the Amazon price matching app to scan the barcode of an item on-the-spot to find out if they’d get a lower price by ordering it from Amazon.

Budgeting

Short-term budgeting without a big-picture goal

Living paycheck-to-paycheck is normal for a lot of people. If your bills are paid every month and you have money left over for food, you are doing well. If you have your debt under control you are doing great.

If you want to stop living paycheck-to-paycheck, the first step is to stop spending your entire paycheck. Maybe you have a low income or an extraordinary amount of debt. If you struggle with either of those problems, it may be time to consider getting a second job or starting work on a side gig. If you can’t reduce your bills, you’ll need to increase your income.

Having a short-term budget is necessary. It should fit into your big-picture goal, though. If you need help making a budget that allows you to save money for emergencies and for your future security, you have options. Take a personal finance class, read blogs by popular personal finance experts, and learn as much as you can about managing your money.

Not using technology to track spending

If you’ve struggled to keep track of your spending in the past, explore some of the free apps available to help you understand the limits of your budget in real time. Whether you prefer Facebook messaging, texts, or alerts via the app on your smartphone, services like Wally and PocketGuard let users know exactly how much money they have to spend as it crunches numbers on-the-go.

The app Albert takes it even further by becoming a personal assistant for all accounts with easy-to-understand suggestions for improving your financial life.

Taxes

Not contributing to a Health Savings Account

If you have the kind of health insurance policy that allows you to own and contribute to a Health Savings Account (HSA), you should be using it. Even if you don’t spend much on out-of-pocket healthcare costs, this account offers huge advantages.

Your HSA offers a triple-tax advantage. Your contributions are tax-deductible if you don’t itemize and make them from your own funds. If your employer offers you the opportunity to contribute via payroll deductions, take it. Your HSA account grows tax-free at the federal level. When you use the funds for qualified medical expenses, withdrawals also aren’t taxed.

If you have funds in your HSA at the end of the year, they simply roll over to the next year. Choose your HSA administrator so you can invest the money in this account the way you do your other retirement funds. If you leave the money untouched, it can grow over time. When you turn 65, you can use the funds for anything, and you won’t have to pay the 20% tax penalty. The money will simply be taxed as normal income.

Counting on your huge tax refund every year

When you work for a traditional employer, their payroll service holds back money from each of your paychecks and sends it to the state and the federal government. When your employer withholds too much money from each paycheck and sends it to the government, you can file paperwork and ask for a refund.

Your tax refund is just that. It’s a refund of money that you overpaid to the government. With the exception of certain tax credits, the money you receive after you file your taxes each year represents an interest-free loan you offered to the government.

Treating this money as a gift or winnings is a mistake. Your tax refund is money that you earned. It’s just as valuable as every other dollar that’s included with your paycheck. If you’d like to loan the government less money out of each of your paychecks, simply fill out a new W-4 with your employer and increase the number of exemptions you claim.

The amount of your tax refund will be smaller, but your paychecks will also be larger. Be sure to set aside money for seasonal expenses and make sure you prioritize keeping up with your bills. Sticking to a budget is important if you are going to spread out your tax refund instead of waiting for it.

Banking

Paying bank fees

Most people don’t think about their bank fees. Over time, they add up. This is an area of your financial life where you may be spending money on something you could easily get free.

Here are some examples of bank fees to watch for:

• Out-of-network ATM transaction
• Account reaches a low balance
• Overdraft protection
• Automatic transfers from one account to another
• Monthly service fee
• Wire transfer
• Foreign transaction
• Exceeding maximum allowed number of transfers

Choose a bank or credit union that doesn’t charge a monthly maintenance fee under any circumstances. There are plenty of online banks and credit unions that don’t impose fees for low balances, lack of direct deposit, and transfers.

Learn the locations of in-network ATM machines near your home and workplace. Commit to using only those machines when you need cash, or simply use the cashback option when you use your debit card at a retailer that offers the service.

Overdraft fees can cause an avalanche of financial problems. While most banks will refund one or two of them upon request if it’s a rare occurrence, people who pay these fees frequently should consider asking the bank to remove overdraft protection from the account. This means that if you don’t have enough money to cover a transaction or check, it may be denied. It also means that the $25-$39 fees after every overdraft on your account will stop.

Putting off switching from a bank to a credit union

When you move your money from a bank to a credit union, you’ll get lower interest rates on loans and higher interest rates on your deposit accounts. Banks are for-profit institutions that exist to make money for a group of shareholders. credit unions aren’t in it to make a profit. Some even pass savings on to their account holders.

If switching banks sounds like a huge pain, check out a few local credit unions. Many offer programs that help you make the transition easily and quickly. You’ll enjoy lower fees and probably also get better customer service when you choose a credit union.

Debt

Overspending on a mortgage

The bank may issue a pre-approval for a mortgage before you start shopping for your home. This is great news. It helps the process go smoothly and when you find a place you’d like to purchase, it lets the sellers know you are serious about your offer.

It’s best to come up with an amount of money and a monthly payment you are comfortable with instead of relying on the bank to tell you how much to spend, however. Everyone has their own tolerance for risk, and for some people, a big mortgage payment is just too stressful.

Before you buy a home, figure out the mortgage payment, taxes, and insurance. Call the utility companies and ask for an estimate of past usage at the property. Put together a hypothetical budget that includes those forecasted expenses. Include other expenses like home improvement, contributions to an emergency fund to cover unexpected problems, new furniture, updates you want to make to the home, and commuting costs.

Some financial advisors recommend that you live with that budget for a few months to make sure you feel comfortable. If that’s not possible, at least do the math on paper so you can see that it works. Make sure you’ll have enough money left over for debt repayment, savings, food, and entertainment.

Using credit cards as an emergency fund

It’s common to keep a credit card account “just for emergencies” and it’s a lot easier than trying to save money for an actual emergency fund. The problem is that when you have an emergency you can’t cover with the money you have on hand, you probably won’t be able to pay off the credit card charges quickly enough to avoid paying high interest.

Your blown tire, dead battery, leaking roof, broken tooth, or sick dog causes you a great deal of stress and inconvenience. When you charge the emergency on a credit card, it also costs you interest.

Instead of depending on your available credit to take care of your financial emergencies, try saving money to put into an actual emergency fund. If you have credit card debt that you’d like to pay off first, just work toward saving $1,000 and then stop. Turn your attention to paying down your credit card balances and when you have that under control, resume saving for emergencies. If you need to use part of your $1,000 emergency fund to cover an emergency, that’s OK. Bring your account balance back to $1,000 and then start paying down your credit cards again.