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Rising Father

5 Common Mistakes Men Make With Their Money

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When it comes to finances, many men are at a disadvantage. We aren’t raised with the best money skills, and we often take shortcuts that end up costing us in the long run. This blog details five mistakes men make when they’re trying to balance their account, spend on discretionary income, or save for retirement. And there’s no time like the present to start fixing these mistakes!

Mistake No. 1:

Discretionary Spending instead of investing
Many men would rather spend their money on gear, clothes, cars, and vacations than invest in a retirement fund. This is understandable; who doesn’t want to look good and enjoy themselves? But if you’re putting your discretionary income into these items instead of investing for the future, you are losing out on a huge opportunity.

Just like having money automatically transfer to your savings account, money can be automatically sent to investments. Most workplaces will set this up with IRAs, 403bs, 401ks…etc. Contact a financial advisor if this isn’t set up already for you.

An additional way to invest is with apps like Robinhood. Robinhood lets you make trades with zero fees. You can also set up a recurring investment as often as you like. Recurring investments and automatic transfers are the best way to make sure you don’t have the temptation to blow money on a useless item.

The earlier that investment starts, the better off you’ll be!
*If this sounds familiar to what’s going on with your finances, take a minute now and figure out how much you have available to invest monthly. If you’re not sure, make a list of everything you spent last month, you could go without. (Starbucks, eating out 10x, $500 from Amazon…etc) Use that money the next month for investing.

Mistake No 2:

Not setting an emergency fund
Many people who aren’t living paycheck to paycheck get lazy with money management. They think “the worst won’t happen” But the truth is, life happens and things can change drastically in just a few hours (or days), with unforeseen yet serious consequences. Living without having at least some money set aside for emergencies ultimately puts your loved ones’ lives on hold until they can bail you out of whatever mess you are in.

The easiest way to make sure this doesn’t happen? Set yourself up with about three months worth of salary when possible, and tuck it away into savings.  That way there’s something available should anything unexpected arise.

Three months of salary tucked away might sound like a pipe dream to many people at this point. BUT, start somewhere. Make a goal of 2 weeks salary in savings, then slowly add until you hit your three-month goal.

I promise you will sleep better at night knowing you have a cushion to fall on should you need it.

Mistake No 3:

Buying things on credit
This is a mistake that’s often made when a man doesn’t know the difference between discretionary and necessary spending. It can also happen if they’re not well versed in budgeting, use their account balance as an excuse to buy something before it drains away, or are simply living paycheck-to-paycheck without enough savings built up. There are many ways this happens, but at its core, it boils down to impulse buying with no means of paying off what was bought.

A credit card can be useful IF you are extremely disciplined. If you don’t know how to use credit cards responsibly, they can be downright devastating.

All credit cards ave interest rates. The average rate right now is about 18%. This means that unless you pay off the credit card immediately, that $1 candy bar cost you $1.18. Didn’t pay off the entire balance that month? After two months that candy bar cost you $1.40.   What often happens is charging the card gets so easy these balances add up to hundreds, then thousands of dollars. Now imagine that $1 candy bar but with a $20K credit card balance. Not fun.

Make it a goal to buy everything with cash until you have years on financial discipline to responsibly use credit cards.

Mistake No. Four:

Not saving for retirement early

Pension funds are long gone for most people, and according to a report by the Center for Retirement Research, Americans are now saving at their lowest rate in over 30 years. That doesn’t bode well for people who want to retire someday. As it stands, most workers will have little choice but to continue working past retirement age because they can no longer afford not to.

The first step is understanding how much money you need every year after retiring based on your desired lifestyle – this number is called “annual savings.” It’s important that you consider all aspects of retirement, including taxes, inflation, healthcare costs (especially if you’re paying premiums), and lost income from Social Security benefits being withheld when withdrawing funds early.

As with savings accounts and investing, the earlier, the better. Create separate investment accounts just for retirement with the help of a financial planner.

Even if you waited too long, today is better than tomorrow.

Mistake No. Five:

Not Setting A Budget
Setting a budget is the best way to ensure that money starts working for you. It helps you get your finances under control, and can help you make more informed decisions about how to spend your discretionary income each month.

The first step in setting a monthly budget is calculating your expenses by subtracting what comes into your account from what goes out of it. (hopefully that ends in a positive number)

This calculation will determine if there are any gaps between what’s coming in and going out; this is also known as a deficit or surplus, depending on whether there’s an excess amount left over at the end of every month. If so, then it may be time to cut back on some unnecessary spending habits before they become harmful financial problems later down the line!

Some great budgeting tools are MintPersonal Capital, and Spendee. This can help you to see if you’re overspending in any area of your budget, or where you might need some extra income coming in instead.

These are just a few of the mistakes men make with money. If you want to learn more, check out our other articles in Rising Wealth!

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