Our most common financial mistakes and how to avoid them

9. We live from hand to mouth.

If you're not familiar with the term - it means living paycheck to paycheck, without any extra cash flow. Once we've used up our current salary, we're out of money until the next one.
Those who live this way think there is no way out. But financial experts will advise us to give up some of our vices, such as daily coffee, for a few months. This will save you extra money and start your debt elimination strategy. Before we know it, we'll have a much more stable financial life.

8. Credit card balance.

By using a credit card to buy our things for basic needs, we make the first big mistake. By regularly not paying off our debt or the limit we have on the card, we commit another mistake. When we default on our debt, we end up paying about three times the original amount.
Banks, of course, count on this - this way, among other things, they also secure a significant amount of money from interest. According to debt relief experts, the money we pay in interest could actually be saving. By doing so, our wealth would only be gaining instead of losing.

7. Mortgage.

If you've ever caught House Hunters on TV, you know that about 99 percent of real estate agents push our home purchase with a higher sales price than the buyers originally anticipated. Why? Since they are only paid on commission and the higher the price, the higher their share.
Not only will they encourage such a purchase, but they will justify it by saying that it is a financially sound plan, as we will get a higher interest write-off on tax. What they don't tell us is that with a property with a selling price in the millions, we can save only a few hundred euros more on our taxes. What we are usually left with is a hefty mortgage that often puts a strain on our finances.

6. Saving money before paying off debt.

Some financial gurus accidentally encourage people to save money regardless of their financial situation. But think about it: if we paid more interest on our debts than we saved, then we actually lost money.
It's a simple math equation. For example, if we paid 20% interest on our current credit card balance – €2,000 – and earned only 2% interest on our savings account, our money is much better spent paying off credit card debt. If we can't pay off the debt in just a few payments, then we make sure we pay a little more than our monthly minimum - the amount that actually keeps us in debt. Once we pay off our debts, we will have more than enough money to start with enough money in our account to build a good financial position. Eliminating debt is a big and important step in creating wealth.

5. We don't have an emergency fund.

Emergencies happen to all of us. It is unlikely that any of us are immune to it, some people are just much more prepared for it than others. One of the best ways to have more and more money is to build an emergency fund. We should have enough money there to cover expenses and debts for eight months. Money for emergency use will only benefit us, among other things: if, for example, our washing machine breaks down, we don't have time to wait for sales or get involved in the bureaucracy of a personal loan. If we don't have an emergency fund, we will end up in a worse financial situation.

READ MORE: How much money do you need to put aside every day to be a millionaire by age 65?

4. Wasting money on things that are not vital.

Many people who are not satisfied with their financial situation do not realize how much money they have actually spent on unnecessary things, such as a "fancy" espresso or the purchase of items that seem vital, but are not.
If we keep a journal for at least a month, it's very likely that we'll see exactly why we don't have any extra money. If we buy two coffees a day, we probably spent around 90 euros per month. Coffee prepared at home will cost us much less. If we go to a restaurant for lunch every day, we probably spent around 42 euros per week or around 210 euros per month. Preparing lunch at home will save at least two-thirds of that amount. Often these are small things that can be easily fixed or managed, and at the same time we will have more money to pay off debt and start saving.

3. Buying a new car.

If you have never read the book "The Millionaire Next Door" by Stanley and Danko, then we highly recommend it. It will give us a picture of what self-made millionaires do to be and stay rich.
One of the key findings is that they don't buy new cars, they buy used cars that hold their value, such as the fashionable Lexus. Then every few years they sell their used car for almost the same value as they bought it. According to the edmunds.com a new car loses its value the minute you drive it out of the showroom... So why waste money when you can buy a slightly used car for a fair price?

2. No financial plan for the whole family.

Let's say we are the person in the household who actually pays the bills. Every month we find ourselves under pressure to pay the bills. Do we fight alone or do we inform family members about the situation? Do we have a financial plan for the whole family or do we let things take their course?
Creating the right financial plan for the whole family can be difficult, but it will work wonders. Let's start by having everyone in the family record their daily consumption for a month or a week. Let's compare the sums with the costs and see where they can be reduced or even eliminated. Family members are then instructed to reduce their originally planned expenses in the coming month by the amount by which they exceeded their spending. Before we know it, everyone in the family will be jointly managing the family budget and continuing to perform all their duties.

1. We are not saving for retirement, even though we are employed and working.

Saving for retirement is difficult, but at the same time it is an important step towards creating a carefree future. Many would like to avoid this topic because it seems light years away. But time creeps up on everyone. Before we know it, we've done our job and panic and fear will begin to grip us.
If we start saving hundreds of euros a month already at a young age, we should have nothing to worry about. And the "Baby Boom" generation should be a lesson to all. Because they didn't take this into account in the beginning, many people today have to work until the age of 70 and more. Expenses have more than doubled over the years, while income has