When it comes to handling money, no one is free from mistakes, no matter how much or little of it is available each month. Some money mistakes are harmless, others have serious consequences, and still others we do not even perceive as mistakes in everyday life.
What are "money mistakes" anyway? Quite simply, they all cost you money that could have been put to better use elsewhere. Or they steer money to destructive businesses, such as defense contractors, instead of sustainable projects that benefit society.
Here are ten money mistakes you definitely shouldn't make – and luckily can avoid quite easily!
1. Not caring about money and finances
"Yeah right, that's what they have to say in a blog about money yes." Nah really, seriously, the money mistake we all make most often is that we don't care enough about financial topics!
And that is completely understandable! Matter appears dry and brittle. And by and large, most of us get by with our money. Why bother?
That's why: it's your money. You are in control of what happens to it. Your wallet rules the world a little bit with. And your account even more. The more you know about banks, financial systems and money transactions, the better decisions you can make. (Thanks for taking an interest in our blog, by the way!)
2. Always living on credit
Keeping the credit card glowing while shopping online, buying the new car on credit, constantly paying off the latest smartphone via a "basic fee" (and hidden installment payments): It is tempting to fulfill consumer desires right away, but only have to pay for them later.
But living on credit is dangerous. Because the mountain of debt grows with every new acquisition. Debts either shrink again quickly – or they grow until they become a burden and can no longer be managed. However, many do not realize this mistake until it is too late.
Our advice: Ask yourself with every purchase "Do I really need this??" Make your purchases only after adequate time for consideration. And say no as soon as someone wants to push you into something.
3. Having no idea of the costs
You probably know how much salary ends up in your account each month. But do you know all the monthly fixed costs that are deducted from your income? Can you estimate what you spend per month on rent, groceries, and other essentials like cell phone, transportation, or videos?
Yes, keeping a budget book is old fashioned. But it helps you get a realistic idea of your monthly budget. This will give you a much safer estimate of how much money you spend on what, how much is at your free disposal, how much you can set aside.
4. Constantly store for cheap deals
Store for cheap deals – how can that be a mistake, you save money after all? Yeah sure, but without the "offers" you would have saved the money completely. Because whether it's Black Friday, Cyberweek or rummage sale – they all tempt us to "bargains" that we don't need at all. And when it comes to superfluous purchases, you really don't "save" anything.
Online shopping tip: Only put the things you're interested in in your shopping cart – but only order on a single day of the month, or at least during the week. You'll be surprised how many orders don't even seem necessary to you at a later date. (Oh, they are "promotional prices" valid only for a few hours? Now you know why: the pressure of deadlines is to push us to buy. To our advantage? Eben.)
5. Do not build up reserves
Things have changed in the banking sector since the 2007 financial crisis. Banks need to increase equity, for example, to cushion loan defaults. Also, many companies regularly put money aside to be prepared for times of bad order situation.
We private individuals should also build up reserves and, for example, deposit a certain amount of money each month, for example, in a call money account. Then, when the refrigerator needs to be replaced or an urgent repair needs to be done on the car, you won't get into trouble because you can't afford major expense.
6. Just don't think about "later"
Speaking of reserves, no young person likes to be reminded that someday they will be old and frail. Accordingly, many postpone the topic of "retirement planning" indefinitely.
This can be a pretty serious mistake. Because it is still quite uncertain whether the state pension will be sufficient to cover living expenses in old age. The earlier you start with an appropriate pension plan, the lower the monthly contributions – and the higher the payouts in the end.
7. Giving up control
Many of us are giving away part of our finances. Many people, not only young, even tend to let someone else handle money matters completely – not infrequently the partner in the relationship. This shot easily backfires, for example in the case of a separation. Serious mistake then.
Others entrust their savings to a financial advisor or investment manager. This may be the right way to go, as we usually trust capable experts to do this for us. But never give up control completely! Be an interested, if not annoying customer who always wants to know everything about the investments. Because if you don't, you may end up funding the very large corporation whose unsustainable products you've been trying to avoid on principle.
8. Waive discounts
Discounts are available in a wide variety of places for students, retirees, members of drivers' clubs or certain associations, and many other groups of people. There is no shame in using them. Even if they are only small, over the course of a year you still end up with a considerable savings potential.
Similarly, for important but not urgent purchases. Retailers in particular regularly run discount campaigns, for example at Christmas and Easter, or traditionally in end-of-season sales. If you can wait and don't necessarily need the latest thing, this is a great way to save your wallet.
Important: Discounts are not bargains! With discounts, you wait for the necessary purchase to become cheaper. With bargains you buy something superfluous just because it is cheap at the moment.
9. Do nothing at all
Probably the biggest money mistake? Just do nothing and carry on as before. But then neither more money remains in your wallet, nor do you use the power of your finances.
What politicians decide at climate conferences, for example, we have little control over. But what we buy, only we decide. Our purchasing decisions determine which products, services and companies are more successful. And so, in the end, our conscious consumption changes the world – for better or worse.
But where to start? Our suggestion: Start by switching to a sustainable bank. Because thanks to EU law, it's now easier than ever – and you're steering your money in sustainable directions.
10. Make your money work positively, not negatively
Speaking of sustainable bank. Nor should you care which financial institution holds your account. Because every bank works with its customers' money. By choosing a sustainable bank, even for your current account, you can actively contribute to a better world. And this contribution is not small, because it is the sustainable banks that invest in the energy transition and make ecological and social projects possible.