5 Personal Finance Advice We Learn Too Late

Despite hearing a lot of personal finance advice, it often takes experience to truly learn a lesson–especially when it comes to money. When you’re young and have little to no responsibilities outside of school, however, you don’t see the big picture, and moderation is not in your vocabulary.

But if you’re looking to learn before you make mistakes with money, here are a few five important lessons you should avoid having to learn the hard way.

Never Take A Deal For The Sake Of A Deal

I’m a huge fan of sites like eBay and 1Sale. There are times when I really am looking to save on a specific product, and those sites really help me achieve that. However, I have been the victim of the “but-it’s-such-a-good-deal” mindset plenty of times in the past (and once or twice recently).

Getting trapped in this mindset leads to a serious excess in spending a lot of useless crap boxed up in closets a storage units later in life. For instance, the idea of a soda machine sounds great at first, and at only $50 you’re sure to save some money eventually, right? But how long are you really going to keep up with it? If it’s a spur-of-the-moment-type of thing, it’s best to go home empty handed and do some research before committing to a purchase

Don’t take this advice the wrong way, though, because deals are great. When I find something I genuinely want or need for what I truly know is a bargain price, I feel confident in my purchase. The only thing you should be wary of is purchasing things you know you don’t need simply because you feel like it’s a great deal.

Always Wait On Big Purchases

If you’re looking for any type of money advice, it’s likely you’ve purchased plenty of big-ticket items on impulse. It’s often hard to resist the urge to spend, but patience also pays off in the end.

Take the time to research the product, and let the desire settle in for a bit. Oftentimes you’ll lose interest after a week, or something else will come along. Either way, give yourself a waiting period in order to make a more level-headed decision.

Before making a big purchase, I like to ask myself three simple questions:

• How much did I have to work to pay for this thing?
• Can I return it for a full refund if I quickly get buyer’s remorse?
• If I buy now, will I miss out on a better deal later?

Also take stock of how a purchase will affect your life. For instance, if you’re already struggling to motivate yourself to do school work, is a new video game system going to help? Unless you’re buying it as a post-semester reward for hard work, probably not.

Quality Is Worth The Extra Cost

I’m a cheapskate, so it’s very hard for me to justify spending a lot of money on certain things. But one of the most important things I’ve learned as a cheapskate is that quality is worth the extra cost. That doesn’t mean I stay in five-star hotels while traveling or always buy brand-name products, it simply means I understand when I need to spend more to get more.

You’ve no doubt been burned by a cheaply-made product more than once in the past, and that’s likely caused more headaches than you’re willing to admit. The saying “if it’s too good to be true, it probably is” has been ingrained into my wallet after a number of terrible purchases. Sometimes saving money ends up costing you more.

Of course, I’m still bitter that an iPhone costs over $600, and the fact that little things like quality toilet paper and certain foods are so much more expensive than their generic and cost-cutting counterpart, but over time I’ve been able to balance the savings I get from certain items with the premium price of others.

The Small Stuff Adds Up

One of the biggest reasons everyone should attempt to live on a written budget at least once in their life is because simply setting one in your mind is pointless. Something will always get in the way of your ability to actually stick to the budget. It may not be from major purchases or anything like that, it’ll likely just be the little things that come up out of nowhere that really add up each month.

Your budget should always include unexpected expenses to add some wiggle room, but you should also not be consistently hitting your unexpected limit. At the end of each month, take a look at where your money went and ask yourself–or a friend who happens to be a skilled accounting major–if there’s anything you can cut or if there are ways you could spend less. Here are a few things I cut out that made a big difference in my overall budget:

• Eating Out — Just 4-8 times a month can cost you anywhere from $100-$300 a month easily. If you decide to not eat out at all that’s great, but cutting that spending in half is one of the easiest ways to save money.
• Cell Phone Service — Contract cell phone service has become more expensive than TV and internet for many–at about $90 a month for a single line for a smartphone. It’s insane for a budget-minded person to spend that amount on service when you have countless other expenses. Prepaid service–that can be had at half the price–is often just as good in most areas of the country.
• Fuel — On top of a car payment and insurance, gas can eat away at your wallet each month more than you’re probably willing to admit. One way to save money on gas is to simply maintain good driving habits and get more done in less trips. Or if you’re in a more urban environment, take advantage of public transportation.

Don’t Upgrade Your Lifestyle With Each Pay Bump

Getting a pay increase is a great feeling, and as you progress through life you’ll probably be looking to put some of that extra money to use–whether that means ditching the roommates or buying a new car. But the best thing would be to wait until your next pay bump to upgrade your lifestyle.

By pocketing that extra cash for a while, you’ll not only increase your savings, but you’ll adopt a valuable habit that could save you from debt and stress down the road.

What’s a piece of advice you wish you could give to yourself a few years ago? Let us know in the comments below and your tip could help future readers!