Silly Money Moves Smart People Make All the Time

There’s a misinformed conception people have about financial success: Smart people are savvy with money and less intelligent people are bad with money. If only that were true, …

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There’s a misinformed conception people have about financial success: Smart people are savvy with money and less intelligent people are bad with money.

If only that were true, though. Here are four silly money moves smart people make all the time.

Leaking Money

The daily latte, the pint after work, the candy bar and drink at the drugstore checkout counter. There’s nothing inherently wrong with any of these purchases, but they can be financially problematic as habits. And it’s not just high-earners that experience this money leak either. The smaller the income, the more impactful the money leak.

Use a transaction tracking app like Mint or Clarity Money to total up these automatic purchases to see what you’re stealing from yourself each month. When you understand the specific amount that you’re losing for purchases you don’t really care about, you’ll have an easier time resisting the next time you catch yourself spending on auto-pilot.

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Not Understanding the Credit Profile

A credit report is a universal financial token of trust. We all must have one to live in modern society. Destroying the value of yours makes securing housing, buying a car, or getting a personal loan in the future much harder. Five key factors make up a consumer’s credit profile. The two most important being what you owe and your payment history (30 and 35 percent, respectively). The other three factors are length of credit history (15 percent), credit mix (10 percent), and new credit (10 percent).

Living in Debt

Seeing as 73 percent of Americans die with outstanding debt with an average balance of $61,554, it’s easier to understand the resignation of living in the red. Even excluding home loans as a form of debt, the average balance was $12,875, illustrating the dependence on credit in this country. While it might seem normal to have debt, it puts a tint on everyday life; playing into financial decisions, affecting emotional health and limiting your long-term economic freedom.

People often shun solutions like debt settlement or bankruptcy, but it may be better than never making progress. They could pave a road that lead you to getting out of debt. If you use debt settlement, make sure you vet companies appropriately by checking how long they’ve been in business and the amount of debt they’ve resolved to-date. It’s also worthwhile to check review sites like the BBB and Consumer Affairs for first-hand customer accounts. For every quality company like Freedom Debt Relief operating in the US, five companies are looking to scam debtors.

Creating a Morale-Draining Budget

Budgeting is clearly important, but if yours consists of arbitrary and/or unnecessarily strict ways to cut spending through the guise of “saving,” then you need to rethink your budget.

Budgets are about aligning your daily and monthly spending with your long-term goals. Let your long-term budget inform your monthly budget, not the other way around. Develop your budget in stride with what makes you happy. Prioritize those spending areas and cut back or be resourceful in purchase areas that you don’t care as much about.

Being smart isn’t a prerequisite for being good with money. Financial literacy has nothing to do with thoughts and everything to do with follow-through and discipline. Steer clear of these silly money moves and never stop learning about financial wellness; it’ll change your life!

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