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Common Bad Attitudes that Lead to Common Financial Mistakes

Updated on January 3, 2011
Is your attitude causing you to make some really dumb, but common, financial mistakes?
Is your attitude causing you to make some really dumb, but common, financial mistakes? | Source

Most of the financial mistakes that people make in their lives are not rare or unique mistakes. They make the same common mistakes that everyone else is making. You can learn to have better habits that reduce the chance that you will make such mistakes. However, there’s something even better that you can do to prevent financial problems in your life. You can change your attitude about money. The underlying bad attitude and mistaken beliefs are really what cause people to make the most common financial mistakes. By undoing that old thinking, you’ll make it easy on yourself to avoid those mistakes in the future.

Examples of Common Financial Mistakes

Just what type of financial mistakes are we talking about here? Well, some of the most common financial mistakes that you might be guilty of include:

o   Spending more than you earn. This is a situation that clearly leads you directly into debt, a situation that causes serious financial problems of many kinds. Despite this, it’s a mistake that is very, very common. You can learn habits to help you save money or earn more money. However, if you address the actual underlying issues and attitudes that cause you to engage in this behavior then you’re more likely to eliminate the problem for good.

o   Buying impulsively. Even if you have some extra money to spend, it’s not necessarily a good idea to buy something impulsively. It’s certainly an action that’s a terrible idea if you don’t have the extra money to spend. Although it’s a lot better to think through every single purchase before making it, many people commonly make the mistake of buying on impulse.

o   Refusing to look at financial realities. A significant percentage of the population simply refuses to take a look at what is really going on with their personal finances. They don’t want to know where they spend their money, exactly how much debt they are in or what a sad shape they are facing in retirement. They choose to remain ignorant. Financial ignorance can only lead to problems in your life; don’t make the common mistake of choosing it anyway.

o   Failing to create an emergency fund. If you’re living from paycheck to paycheck then you’ll always end up in trouble if there’s a financial emergency. Any unexpected funds that are required of you end up having to go on a credit card, creating a lot of debt. You need to have an emergency fund to deal with these situations. Despite the importance of this, it’s common for people not to have an emergency fund.

o   Tax errors. Many people make mistakes when it comes to their taxes. They may have too much withheld throughout the year and suffer financially as a result. They may not have enough withheld and end up owing money later that they can’t pay back. They may simply make mistakes on their forms, taking too few deductions or not reaping the benefits that they should.

Examples of Bad Attitudes that Cause these Common Financial Mistakes

So why can’t you just learn good habits that allow you to stop buying impulsively and to create an emergency fund and so on? Well, you can, and that’s certainly a great place to start. But the fact of the matter is that the behaviors that you engage in financially are usually the result of emotional decisions rather than decisions based on logic. Those emotional decisions stem from attitudes that you have towards money. Addressing the root attitudes and altering them from the inside out will prevent serious financial problems from returning in the future.

Some examples of the bad attitudes that often lead to common financial mistakes include:

o   Wishing that someone else would deal with the problem for you. Many people wish in the back of their minds (and some people even wish outright) that someone else would take care of their money issues for them. A woman may hope to someday marry a man who can deal with the issues for her or an aging person may hope that their adult kids will help them out. The reality is that you need to take financial responsibility for yourself in order to avoid common financial mistakes.

o   Hoping to win the lottery. Do you know how many people keep on making the same common financial mistakes again and again and just hope to “win the big one” to resolve those problems? Do you know how many people actually win the lottery? It’s not that many. And even if you do, you’ll still have unaddressed bad attitude issues that could cause you to rapidly lose those winnings and end up in exactly the same place that you were before!

o   Holding a belief that you can’t learn about money. Many people are very intimated by the idea of trying to deal with their money. They hesitate to even try to understand the details of their credit statements let alone look at a credit report or learn to do serious investing or retirement planning. This bad attitude about how hard it is to understand money is what leads to many of the most common financial mistakes. You have to adopt the attitude that personal finance is an educational topic that you can learn and become skilled at if you invest the time required to study up on it. This is really important if you want to be smart with money.

o   Believing that professionals are out to screw you over. Many of the most common financial mistakes could be dealt with if you were willing to get professional assistance. Tax problems can be resolved by working with a qualified tax accountant. You may find that working with a personal finance advisor, a credit counselor or a psychologist specializing in debt is helpful. However, if you hold a belief that these professionals are out to get one over on you then you won’t accept this help. You’ll continue to make the same common financial mistakes over and over. Of course, you should always review professionals’ credentials carefully to make sure that they’re good people to work with but you shouldn’t assume that they’re out to get you because the truth of the matter is that most of them are not.

Comments

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  • profile image

    Rommel 

    7 years ago

    Same here. I am making the same mistakes and am having financial issues every time.

  • htodd profile image

    htodd 

    7 years ago from United States

    Great info,Thanks for posting

  • dudumodu profile image

    Oludotun Osunsanya 

    7 years ago from FCT,Abuja

    You sure get the core of the problem. Your article is also well written and well laid out. Keep the ink flowing.

  • Hello, hello, profile image

    Hello, hello, 

    7 years ago from London, UK

    A perfectly, down-to-earth, written hub naming all the sins we commit, including me. Absolutely brilliant.

  • Simone Smith profile image

    Simone Haruko Smith 

    7 years ago from San Francisco

    Attitude plays such an important role in personal finances - I'm really glad you've called it out, and appreciate your advice!

  • fucsia profile image

    fucsia 

    7 years ago

    In the past I often spent more than I earn. I had to learn the lesson: now I am very careful with my finances. Anyway I always hope to win the lottery!

  • profile image

    Doug Turner Jr. 

    7 years ago

    This is spot on. Years ago I racked up a big chunk of credit card debt and was constantly avoiding it and refusing to deal with it. Eventually my money woes came to a head and I was forced to confront the situation. I had to change the way I view finances, as you advise here. Very well written and clearly expressed. Thanks.

  • IntimatEvolution profile image

    Julie Grimes 

    7 years ago from Columbia, MO USA

    I think your "Refusing to look at financial realities.", is exactly right. You hit the nail on the head with this one. I think that is a lot of Americans most common financial downfall, and why we are now in a bad recession. Heck far, our own Federal Gov., has a hard time looking to the facts, and planning accordingly. Great hub, and extremely well written. I sent a tweet out on this one.

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