Money is a sensitive subject for many of us, and even when we do have a handle on it, nearly everyone has money goals they’d like to accomplish. The unfortunate aspect about most individuals’ money goals is they spend too much time thinking about lofty wishes and too little time mastering the basics. Healthy money habits are generally common sense, but unfortunately, we can sometimes miss putting these habits into practice. Here are the five most common money mistakes you’re likely overlooking.
1. Not having a budget
As simple and even cliché as it may sound, not utilizing a budget is one of the biggest money mistakes. When you don’t have a reliable record of how much money is coming in or where it’s going each month, this creates a lack of self-discipline. Without a budget, money is nothing more than a means to an end, instead of a powerful mirror of value.
Luke 14:28 says: “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?” That’s truly what a budget is, simply sitting down and estimating our future costs.
Setting up and sticking to a budget puts you in the driver’s seat, allowing you to prioritize what matters and give your habits a square look in the face. Your money habits aren’t actually about money—they’re about everything else in your life. When you put your habits down on paper and see how much money is being spent on them, you can prioritize which expenses to eliminate and which are truly necessary.
2. Not saving money
Despite hearing wise counsel about saving money, about 62% of Americans have less than $1,000 saved for an emergency. Saving money is often a behavior attributed to those with “excess income”. Tragically, this same mindset prevents individuals and families from planning and effectively saving for retirement, having emergency cash in true emergencies, and generally living stress-free.
Saving money allows you to create that tangible safety net for emergencies, as well as deeper seasons of giving, unexpected gifts, and last-minute events. Willow's Senior Pastor Bill Hybels has taught the 10/10/80 rule for years, meaning you should give 10 percent, save 10 percent, and live on 80 percent. Maybe you aren’t able to save or give 10 percent of your income today, but make a concerted effort to start with something. If you work extra hours, receive a bonus, or get a raise, these are ideal moments to increase your savings percentage.
3. Avoiding giving and generosity
Giving can be one of the most uncomfortable and least talked about aspects of money. It is common for people to struggle with knowing where and how much to give, but studies show that roughly 45% of Americans don’t donate anything. This reality points towards materialism and the belief that people can, in some way, buy happiness. One of the greatest ways to break the hold of materialism in our lives is to give generously. Tim Keller teaches that to the degree we understand the Gospel, we will live radically generous lives.
Many people don't feel they are in a strong enough financial place to give, but Jesus reminds us in Luke 16:10 that “Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much.” The shocking truth is that if you earn over $34,000 per year, you are in the top 1% of income earners world-wide.
Scripture also promises to bless to those who put God first in their finances. Malachi 3:10 says “'Bring the whole tithe (10%) into the storehouse, that there may be food in my house. Test me in this,' says the LORD Almighty, 'and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it.'" If you are not yet giving, put God to the test, and see how He works in your life.
4. Impulse shopping
We live in a heavily consumeristic culture, making it challenging for even the most disciplined of shoppers to resist the hundreds of options in any store. Impulse buying is the act of purchasing something right in front of you simply because it seems to meet an immediate emotional desire. This can be dangerous because you are letting your wallet lead your mind, instead of your mind lead your wallet. Before you know it, you may have spent $50, $75, or even $100 on items that you really won’t need, or don’t need till much later.
To combat impulse buying, make a list of all the items you need before you enter the store. Then, have your list out when you walk through the doors. By the time you’re done shopping, all items will be obtained efficiently and you’ll have avoided overspending.
5. Relying too heavily on debt
Credit is a poor “system” America has come to love and depend on. “Buy now, pay later” first arose in the mid-20th century, as a result of Americans wanting consumer goods and higher standards of living. Businesses quickly latched onto this trend and launched a whole slew of credit options that have increased our purchases dramatically.
Credit dubiously crafts the illusion of money, with an interest rate to boot. Plain and simple, using credit is borrowing money you don’t have, so the best thing you can do to benefit your financial future is pay off all your debt.
Written by Financial Stewardship Volunteer Brad Johnson.