The Biggest Financial Mistakes You Can’t Afford to Make

Our schooling teaches us reading, writing and arithmetic, but we don’t learn about a fundamentally important part of life: money. If our parents were responsible with their money, we may have learnt a thing or two, but usually people are simply left to feel their way through financial darkness, and make potentially disastrous blunders in the process! In order to survive in today’s world, educating yourself about money is very important, yet too few people make the effort. This lack of financial knowledge is widespread, as according to Forbes, a 2010 study found that 34% of Americans rate their money know-how as dire. However, you can change this. Here are three common financial mistakes that you should know about.

Deciding to quit your job to study

If you’re having job problems, don’t become a student again! Personal finance expert Suze Orman advises that a student loan will just drive you deeper into debt, especially if you’re not working full-time.  Also, student loans can’t be discharged during bankruptcy, so paying them off is more important than paying your home loan or car finance! If you really feel the need to go back to university, Orman advises that you don’t defer your loan payments, as you’ll end up paying much more by the time you’re finished.

Co-signing loans

Apparently women are more prone to do this than men. According to Forbes, studies have shown that women generally have more empathy than men, and they tend to lack moral judgments when it comes to helping out a friend or a relative, so they’re more easily convinced to co-sign loans! According to Orman, if the other party falls behind on a payment, it’s reflected on your credit record, not theirs. There’s also no cancel clause and you’re stuck with it until it’s paid off.

Money will make you happy

This belief is very common, yet very misguided. According to a recent study by Hertfordshire University in the UK, 79% of respondents said their main motivation for shopping was to cheer themselves up (Forbes). Again, women tend to be guiltier of this than men, as they are more prone to use their heart and not their head when buying. According to Forbes, the idea that money can buy happiness is instilled in childhood, when kids see their parents’ happiness over purchases or from expensive family outings. Children learn that money spent together is more important than time spent together (Forbes). The resulting adult is a person who places too much emphasis on money and who tends to live way beyond their means.

Money definitely won’t make you happy and studying again won’t solve all your problems. If you educate yourself more, you will avoid mistakes like these. Ignorance isn’t bliss; it just leads to impossible debt and financial ruin. Learn about money and save yourself from potential pitfalls along the way!