At some point, I’m sure you’ve probably heard a tip or a saying that includes this sage piece of advice: Learn from your mistakes. There’s a lot of truth to that; however, here’s a better approach: Learn from other people’s mistakes.
When USAA decided to help make the Military Saves video project My Money Mistakes a reality, this pain-free approach to personal growth was part of the allure. You can see what I mean by checking out the entire series of videos. Each of the five videos features real people providing actionable, experience-based advice. In other words, they may tell you something you need to hear before it becomes your own reality.
As I watched the videos, I learned about five of their mistakes, all of which I hope you can avoid.
1. Not prioritizing savings. The idea that you can save yourself all the way into a state of misery seems like a counterintuitive message during Military Saves Month. However, that was one of the mistakes that resonated with me. The point? Prioritize your savings and focus on what’s important to you, your family and your relationships. Savings should be a means to some end and not necessarily the end in and of itself. Settling upon specific goals, and saving for them by nicknaming your accounts, could allow you to put this concept into action.
2. Failing to know where your money goes. On the path to financial security, it’s critical to have a clear understanding of how you spend your money. No matter how noble the purpose for every bit of your spending, it should fit into your budget that guarantees what comes in is more than what goes out. Above, I noted the importance of prioritizing your savings; the same could be said for your spending. Track your spending for 60 days -- every single dollar -- and see if the effort yields any surprises or opportunities.
3. Being cavalier with credit cards. A couple of the videos highlighted the danger of credit cards. Ease of access, high interest rates and the ability to push the ball down the road with minimum payments topped the list of potential pitfalls. However, I loved the more positive-framed advice provided by an Air Guardsman: “Don’t use credit cards to extend your lifestyle.” Sure, they are a convenience and reality for most folks, but following that simple piece of advice can help ensure they are not a destructive force in your life.
4. Purchasing a vehicle without understanding the total cost of ownership. Vehicles, two- or four-wheeled, can become a financial showstopper. That’s less likely if you buy them with a complete understanding of the all-in costs, both to buy and own. Understand the price of the vehicle itself, but don’t stop there. Research the cost to maintain, fuel and properly insure the vehicle, as well. Do this, and you’ll be better equipped to make a savvy decision on your next vehicle.
5. Cheating -- financially -- on your spouse. This seems like a no-brainer if you are interested in a relationship that lasts. However, it’s not always easy, as we learned from one of the video subjects. Regular and constant communication about your goals, your financial situation and your spending can help ensure you don’t find yourself in conflict over money. As one of my financial planner friends told me, “Talk about money when you don’t have to.”
If a picture is worth a thousand words, I’m sure I didn’t do the videos justice here. Take a few minutes and watch them yourself. They will provide the opportunity to learn some tough lessons without the normal headaches and heartaches associated with making mistakes on your own. Check out militarysaves.org for more information and additional resources, and take the pledge to save money, reduce debt and build wealth over time.
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