Want to know how to be better with money?

Start by avoiding these common financial mistakes.

Financial decision-making is a skill you get better
at over time, so don't be surprised if you make some of your biggest money
mistakes in your teens and twenties.

Improving your money-management skills comes down
to getting into good habits. Over time, these habits will (hopefully) turn into
a nice stash of savings in your bank account.

But, to get there, you need to know the most common
money mistakes and how to avoid them so you don't end up falling at the first
hurdle.

Common money mistakes

Here are the most common financial mistakes and how
to fix them:

1. Not having a monthly budget

It's often little luxuries that burn holes in our pockets. These could be an expensive gym membership, spending lots on nights out or unnecessary cab rides. While these purchases can be okay every so often, it's when they become a habit and push you over budget that they're an issue. Knowing when and how to stop spending money can be tricky at first. However, following a budget will help you keep track of your spending and identify which habits you need to break.

2. Not earning money in your free time

Finding a way to make money in your free time could make a big difference in helping you afford your monthly living costs. And, if you can save up a bit of extra cash, it will be easier to deal with unexpected costs, such as a last-minute trip home. Don't make the mistake of thinking that making money on the side is only good for your bank account. Having a side hustle is a great way to enhance your career prospects and is sure to impress a potential employer.

3. Running up a credit card bill you can't pay off

Using your credit card as 'free money' rather than only spending what you have is a one-way ticket to financial ruin. If you have a credit card, be very careful with it and make sure you can always afford to pay off the bill in full and on time each month. The same can be said for overspending on buy now, pay later services like Klarna. Only buy what you can actually afford. Paying off your credit card or any other credit every month is vital. Any missed payments will be recorded on your credit score and could make it difficult to do things like get a mortgage later on.

4. Using your credit card to withdraw money from an ATM

Never use an ATM to withdraw cash on your credit card if and when you do get one. Cash withdrawals on credit cards are recorded on your credit score and can look like irresponsible spending. If, further down the line, when you apply for a mortgage, a bank sees you've been using your credit card to withdraw cash, they might be concerned about your money management. It could look like you're having to resort to your credit card to pay for basic living essentials. As such, it may lead them to think you're not financially stable enough to take on a loan.

5. Overspending on food shopping

Supermarkets have a whole host of tricks up their sleeves to make you spend more. Attempting to work your way through the aisles without a shopping list, or even worse, when you're hungry, can be a huge money mistake. Make sure you go prepared and know exactly how much you need to spend and on what. We have a helpful weekly meal plan to help you prepare enough meals for the month and stick to a budget.

6. Lending money to friends when you can't afford it

One of the common financial pitfalls to absolutely avoid comes from having a heart of gold. Lending money to friends, especially when you're already having to live modestly, is a real no-go. It creates complicated friendship dynamics whereby you're thinking "that money could have been used to pay me back" every time they buy a pint. It will also inevitably lead to that awkward conversation when you ask for your money back. Best bet? If you're struggling to make ends meet in the first place, keep your purse strings to yourself.

7. Not having an emergency fund

An emergency fund is an absolute must. If you don't have one, you may find yourself resorting to short-term solutions you'll later regret. Ideally, this fund should be enough to tide you over if your Student Loan is late or your phone suddenly breaks and you need to buy a replacement. Having some money set aside for a rainy day can also be useful if, once you've left university, you find yourself unemployed and without an income for a few months. Topping up your savings account a little each month, even with just a few quid (or putting a penny away in a jar each day), is a good way to get started without leaving you with little or no money to spend for the rest of the month.

8. Forgetting to cancel subscriptions you don't use

When you review your budget, check if you're still paying for any subscriptions for services (e.g. streaming sites) you no longer use. Free trials can help you save money, but we've all been guilty of forgetting to unsubscribe to a service before the trial ends. If you have forgotten to cancel a subscription, check the terms and conditions in case you're eligible for a refund.

9. Not taking out insurance

Taking out insurance on all big purchases can be worthwhile, whether it's mobile phone insurance, a holiday, your car or student contents insurance. Paying just a little bit every month could potentially save you from facing big payments later on if something goes wrong.

10. Staying loyal to expensive banks and energy
providers

Never assume that, just because you're a long-time customer, you'll be getting the best deal on offer. More often than not, the opposite will be the case. You might assume that switching accounts will be a hassle. But most of the switching process is automated now, especially when switching bank accounts. Some bank accounts offer great cash rewards and interest rates on savings for new customers.

Another money mistake? Not realising how many free things you can get from your university.

Sources

Save the Student
14 common money mistakes to avoid

By Save The Student
Save The Student is the UK's leading student money website, helping you budget your money, make sense of student finance, look for part-time jobs, find extra funding and more. Founded in 2007, the website provides free and impartial guides, tools and verified deals to tackle the real-life money problems students face at university.