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1. Not Having a Budget

2. Buying Too Much House

Most experts say that your housing costs should never exceed 40% of your monthly income and even that is pushing it.

Especially when buying your first home, it’s common to buy more than you can really afford. A lot of the time we don’t consider the total housing costs that you’ll incur when buying a home. You need to make sure you can afford your property taxes, your mortgage, your utilities, and any repairs you may need to make.

Being house poor is a really common issue for so many people out there so don’t feel bad if most of your income goes toward your home. You just really need to change it up and try hard to either make more money to offset the cost or move houses so you can really afford where you live. 

3. Spending Too Much Money

4. Not Having a Meal Plan

5. Not Understanding Your Credit Score

6. Running Out of Money at the End of the Month

If you experience the terror of having no money at the end of a pay period, you probably feel like you’ll never get out of this paycheck to paycheck cycle but honestly, you’re probably doing a really horrible job budgeting and planning. 

Money management is key to being able to get out of the paycheck to paycheck horror. The best way to get out of this cycle is to know where every penny goes and to plan for it.

It’s a really great idea to set up a budget that you can do based on how often you get paid (either weekly, bi-weekly, or monthly). Doing it based on your pay period will make things less complicated and make it so you don’t have to worry at the end of the month.

If you’re just starting out with a clearer financial plan, I always always always suggest using the Zero-Based Budget because it’s easy to implement and it gives every penny a job. 

7. Having a Ton of Debt

8. Being Too Scared to Invest

9. Not Being Covered During Emergencies

10. Not Prepared for Retirement

11. Not Earning Enough Money

12. Having a Huge Car Payment

13. Getting a Huge Tax Refund

Most of us see a huge tax refund as a great thing because it’s like “found money” but the truth is if you get a huge refund it means that you’re probably having too much money withheld from your paychecks by your employer.

For some people, this isn’t a problem at all because they take this lump sum of money at the end of the tax year and they throw it towards debt all at once or invest it in something great!

You need to keep in mind that this is money you could have in your pocket every month and you’d be able to save this money or invest it and make more interest from the entire year! You could miss out on some great interest in the 12 months between tax returns.

Any money you can invest is always positive and at least the government doesn’t get to play with it for the year

14. Not Talking About Money With Your Significant Other

Most fights a couple has are because of money. Even when the argument seems on the surface to be about something completely different, it’s usually about money deep down. In so many cases money problems and money differences lead to divorce.

We’ve been brought up thinking that talking about money is taboo and that it shouldn’t be discussed at the dinner table. This is a horrible way to think if you’re deciding to share your life with someone. This common money problem turns into a relationship problem which can affect your entire life.

When you don’t discuss money with your significant other (boyfriend, girlfriend, husband, wife, whatever relationship stage you’re in) you’re just setting both of you up for failure.

There are a few things that you need to discuss with your S/O, let’s go over just a few. I’m going to be writing a full-on blog post on this in a few weeks that will really go into the ways to talk to your partner about money. 

  • Financial goals – You should understand when you and your S/O want to retire and with how much money. You should also know how your S/O thinks about housing and what kind of money they’re willing to put toward a home someday. 
  • Personal Goals – How many kids do you want to have? Will you have pets? How often will you vacation? These things all cost money and if you don’t align with these aspects it could cause money problems in addition to the personal arguments. 
  • Debt Amounts and Reasons – It’s so important to know what you’re working with, especially if you’re getting married. When you marry, their debt becomes your debt and it’s unfair if you don’t find out about it until it belongs to you too.

It may seem very daunting to talk about your money stuff with the person you love because it may take away some of the romance. But it’s going to make the romance stuff so much easier.

15. Lifestyle Creep

So, lifestyle creep. This one is a real problem for people in their 20s. Investopedia defines lifestyle creep as “a situation where people’s lifestyle or standard of living increases as their discretionary income rises.”

In regular people talk, this means that as you start making more money, you start spending more money.

This is a huge problem for people because college graduates go from living that college life in the dorms with no money eating ramen every day and when they start making $40K a year they start spending that $40K a year way quicker than they should.

This even applies to people who just get a new job. We often see it as a way to reward ourselves for making more money. We go straight from driving a crap old car to a brand new one just because we think we deserve it now that we make more money!

We then become accustomed to this new level of luxury so every few years we upgrade even though we could put that money to better use!

The best way to avoid having a real bad problem with lifestyle creep is to follow a good percentage system for your income level. A great example of this is the 50/30/20 Budgeting Principle.  

The way 50/3020 works is that you get a certain percentage towards investing, personal expenses and debt pay down/saving. It’s a great way to adjust your expenses to your income.

Final Thoughts

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