Top 8 Money Mistakes to Avoid in 2023

Planning your finances in 2023? Don't make these money mistakes! Read our list of the top 8 financial mistakes to avoid this year and gain control of your money.

A worldwide survey conducted by UK-based Nielsen Holdings plc reveals some startling statistics: 11 percent of respondents in the US and North America said, they have no spare cash at the end of a financial year.

About 23 percent of respondents in the Middle East, 18 percent in Europe, 17 percent in South America, and five percent in Asia also said they were unable to save anything significant during any year.

Over 30,000 online consumers in 61 countries throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa, and North America were quizzed by the company as part of this Nielsen Global Survey of Consumer Confidence and Spending Intentions.

top financial mistakes to avoid in 2023

Low Savings Causes

There are several reasons for people in the US and elsewhere have lower savings. The main culprit is prioritizing issues like buying or enhancing a home, entertainment, expenses on holidays and vacations, spending on new clothes and jewelry, and investment in new technology such as the latest smartphones and electronics.

Unfortunately, the main culprit remains the mistakes that laypersons make while investing their money.

As interest rates worldwide tend to slide downwards, we take a look at eight top money mistakes to avoid in 2023.

Top 8 Financial Mistakes to Avoid in 2023

Mistake 1: Reckless Spending

Spending

Understandably, nobody wishes to waste money knowingly. However, we inadvertently end up spending recklessly directly or indirectly. Reckless spending occurs in various areas:

Credit Cards

Unpaid amounts on credit cards attract extremely high-interest rates. Unless absolutely necessary, avoid buying on credit cards. And if using one is inevitable, try to settle for the entire amount at the earliest-preferably as soon as the statement arrives.

Online Shopping

Every online store offers highly discounted stuff throughout the year. Additionally, they launch festive offers and promotions to entice buyers and encourage spending.

Often, you would end up buying stuff merely because it is available “cheap” as compared with the local market. Invariably, you may have limited uses for your purchases or end up hoarding products you seldom use.

Latest smart-phones

They account for the highest spending. Before investing in the latest generation of smartphones, study the various features and determine whether you actually require them. Usually, most consumers are unaware of the benefits of new technology.

Hence, they end up spending on the newest smartphones without being able to fully utilize the latest technology. The same holds true for other electronic gadgets and home appliances.

Mistake 2: Lacking Awareness of Financial Markets

Millions of people worldwide lack sufficient or sometimes basic knowledge about the workings of the financial market. They end up investing money in traditional savings plans and schemes offered by banks and financial institutions, without knowing that better as well as safer options are available for earning higher returns.

Avoid this mistake and make your money work harder. You can invest safely in a variety of financial instruments.

Government Bonds

These bonds are guaranteed by your government. Usually, they offer a much higher rate of interest when compared with traditional Term Deposits and regular saving schemes.

Invest part of your savings in government bonds. Look for the latest offerings, interest rates, and other benefits they offer such as tax savings and hedging against economic downturns.

Home Mortgages

Buying a home is often a lifetime achievement, regardless of which part of the world you dwell. Understandably, owning a home means securing your future. However, most people ignore some basics while buying a house such as taxes n property, home insurance, mortgage rates, maintenance costs, and transportation expenses. Look for these hidden expenses you will incur before you buy a house. Some of these costs can bleed your income.

Insurance Policies

Investing too much or too little in various kinds of insurance plans is a mistake you must avoid in 2023. Buying life, health, and home insurance are fine. However, these policies come at premiums. Check whether the returns justify your investments. Also, look for other plans that cover higher education for your kids.

Drawing a proper budget and some financial knowledge will help prevent over or under-investment in policies. Plan for your retirement and buy a good pension plan that can help you maintain your present lifestyle or upgrade it when regular income ceases.

Mistake 3: Making Late Investments

Most people falsely believe they can invest money in savings, stocks, and other financial plans at a later stage in life. This is a complete myth. Starting early is the master key to saving a great fortune that can help realize all your financial objectives. As soon as you begin earning, stash away a sizeable portion of your income and invest in various schemes.

Mutual Funds

This is a secure investment option where banks and financial institutions utilize your money to buy stocks. Depending upon your geographic location, mutual funds are available in three variants: High Risk, Medium Risk, and Low Risk.

Generally, high-risk MFs offer better returns since the fund managers will invest in new stocks and those whose rates swing wildly in the market.

You can make huge money if these stock prices rise and lose if there are downfalls. Low-risk MFs are those where your money is invested in time-tested and proven stocks, whose rates are somewhat stable but profits can be lower. Medium-risk MFs are a blend of high and low-risk stocks.

Pension Plans

The earlier you subscribe to a pension plan, the lower your investment and higher the returns. Waiting to invest till you are 20 or lesser for buying a pension plan can cost your pocket dearly by taking away a sizeable chunk of your income.

When you buy a pension plan at a younger age, your monthly contribution is fixed. It does not increase as you age. Hence, your outgoings will be minimal and will not have any impact on your wages or household income.

Building Financial Portfolio

The earlier in life you begin building your portfolio, the better the chances of financial stability. A great financial portfolio consists of a number of options- Term Deposits, Pension Plans, Mutual Funds, Hedge Funds (Secure Investment Plans), and a variety of other investments.

Usually, your finances will witness growth as you mature in age and career or business. This allows you to better serve your financial portfolio by adding funds to investments that are making profits while procuring newer ones for personal enrichment.

Mistake 4: Avoiding Stocks, Other Markets

Stocks

Most people are wary about investing in stocks, commodities, and foreign currency markets. You can be justified to some extent for shunning these excellent modes of investing and making your money work to grow.

Stock markets are generally unpredictable and rank among the first casualties of any economic downturn. Despite this, the biggest money mistake you can do in 2023 is to avoid stocks and other markets.

Stock Markets

Depending on your geographic location and local laws, you can invest in stock markets around the world. For example, American investors can easily put their money into stock exchanges in London, Frankfurt, Singapore, Hong Kong, and a host of other countries.

The main reason for investing in foreign stock markets, as well as those in your native land, is hedging. Not every economy witnesses a sudden downturn. Hence, your stocks in a foreign land may fare better than those back home or the other way around. This way, your money remains protected against financial uncertainties that can rock the trade.

Commodities Market

Commodity Exchanges worldwide deal in precious metals such as gold and silver, other elements such as copper and platinum as well as crude oil, food grain, oilseeds, and loads of other stuff. Their prices fluctuate according to the demand and supply principle that governs the market.

There are several commodity exchanges in the US as well as in countries in Europe, India, and elsewhere. If permitted by local laws, you can safely invest in commodities exchange. Trading is not very dissimilar to that of stocks.

However, unlike stocks, commodities trade is more susceptible to other vagaries such as festive and wedding season, wars and conflicts, natural disasters, and other elements, since price fluctuations are directly related to abundant or scarce supplies.

Foreign Currencies

For the last several years, online trading in foreign currencies is offered by very reputed financial institutions across the world. You can open an online account with any of these and trade.

Do not be wary of foreign currencies since they can help you make a financial killing with a small investment. You can begin with as low as US$ 100 or lesser in some countries. As rates of the US Dollar, Japanese Yen, Euro and other currencies rise or fall, you can sell or buy.

Mistake 5: Not Diversifying Income

Diversifying Income

The year 2023 offers a lot of opportunities for diversifying income. Inflation rates around the world vary. However, they do take a toll on a single income.

Hence, it makes great financial sense to avoid this money mistake in 2023. There are various ways to increase income or earn a livelihood, regardless of whether you are employed or not. Here we explore some ways to get rich quickly in 2023.

Network Marketing:

Provides an excellent source of additional income. In 2023, you can shed inhibitions and enter network marketing. Utilize your social network, relatives, and friends to promote and sell excellent products offered by leading companies around the world. This can be done in your spare time and on weekends and holidays.

Network marketing, also called Multi-Level Marketing (MLM) is a field open to all. The extra income you earn can be effectively utilized to build a financial portfolio for the future of your family and yourself.

Small Business:

Another inhibition common to the working class is starting a small business. Not venturing into a small business is yet another money mistake to avoid in 2023.

There are myriad choices of small businesses that can be started in any part of the world with little investment and skills. Utilize your skills to the fullest to open a consultancy or offer products and services that are in demand in your area.

Surveys and Coupons:

Online surveys conducted by major organizations and free shopping vouchers are excellent ways to augment your income in 2023. It is a myth that only economically weaker sections of society patronize free shopping vouchers and indulge in online surveys.

Indeed, anyone with a decent income can also engage in these gainful activities in 2023. The money you earn or save by means of online surveys and free shopping vouchers can be diverted to high-return investments.

Additionally, you can also get family members to take these surveys and avail of free shopping vouchers or merchandise to save household expenses. This allows you to step up savings and divert surplus cash to investments.

Mistake 6: Overdependence on Office Jobs

Having a stable job and the accompanying income is fair enough. However, trends indicate that most organizations will reduce their dependence on office-based jobs.

The main reason for this is the higher cost of real estate required to open offices and the expensive man-hours wasted on commutes. Depending on an office-based job may be earning you lesser while costing you dearly. You can avoid this money mistake in 2023.

Telecommuting Jobs

A survey by FlexJobs and figures from the US Bureau of Labor Statistics indicate, between three and four percent of America’s labor force now works by telecommuting. Meaning, they work from home or any other location of their choice. Additionally, projections are that telecommuting jobs worldwide will increase by up to five percent by 2023.

There are several reasons for this: Companies are expanding into hitherto unexplored markets and opening offices is unfeasible. Secondly, employers in the US save on average US$ 11,000 by means of perks paid to telecommuters. Further, telecommuter staff saves an average US$ 4,000 per year on transportation and vehicle maintenance, fuel, and related expenses- that can be invested in the future.

Freelancing

Also according to the US government’s Bureau of Labor Statistics, the number of freelance workers in the US stands between 55 and 60 million. This translates as one in every three employed Americans is a freelance worker. Sticking to an office job is fair enough.

However, a common mistake most skilled and qualified women and men make is, to look down upon freelancing. Provided you possess certain skills, freelancing can prove a more viable and financially sound option as compared with a desk-bound job. Short, medium, and long-term projects for work are available easily.

Relocation

Millions of workers worldwide are scared of relocating to foreign countries or cities outside their native land. This is another money mistake to avoid in 2023. Understandably, some nationalities are at a higher risk of attacks by terrorists and other criminals.

However, working abroad has inherent benefits such as tax-free salaries in some countries, relocation allowances, extra pay for working in distant lands, and perks including free housing. Additionally, you can also stash away money legally in offshore bank accounts, if permitted by the laws of your native land.

There are several benefits offered to overseas workers by your government for investment and repatriation of funds. You can utilize those to get rich fast.

Mistake 7: Household Waste

By household waste, we do not imply that you are merely throwing away garbage or surplus stuff. Domestic or household waste occurs in various ways, which cost precious money.

As stuff gets pricier and salaries remain somewhat stagnant, here are ways to reduce various types of household wastes in 2023. The money you save will be significant by the end of the year and can be utilized for expanding your financial portfolio.

Utility Bills

All countries in the world, regardless of their stage of development, waste enormous amounts of electric power. For example, India accounts for wasting between three and four billion units of electricity in a year. The biggest culprits for wasting this precious resource are households.

One of the biggest money mistakes to avoid in 2023 is wasting hard-earned money on electricity utilized at your home. Power costs are indubitably on an upward swing worldwide. Switching off electric bulbs, appliances, and other electronics when not in use is one way to save large amounts for investment.

Food Waste

Whopping 1.3 billion tons of perfectly edible food- cooked and raw- is wasted worldwide even as millions of people worldwide starve or remain undernourished.

Global warming leading to unpredictable weather is expected to send food costs rising worldwide. You can begin saving on food waste from your household in 2023.

Home Entertainment

The advent of Pay-Per-View channels, Direct-To-Home satellite TV, and cable networks has led to an inadvertent waste of money in recent years. It is best to avoid this money mistake in 2023. Cancel subscriptions to all channels that your family seldom views.

TV networks have a deft manner of weaving packages that contain popular channels alongside those that are largely unviewed. Opt for cable, DTH, and PPV channels that you frequently watch in 2023 to save costs and invest surplus money.

Mistake 8: Unwanted Travel Expenses

Travel Expenses

Nobody denies that your family and you require holidays or the need to travel for business. However, travel expenses worldwide is rising thanks to a plethora of taxes, surcharges, and other esoteric levies that airlines and transportation providers weave into ticket prices. For travel, you can avoid money mistakes in 2023 by following some simple tips.

Fly Budget

Nowadays, Low-Cost Carriers (LCCs) also called budget airlines are available in almost every country on Planet Earth. These airlines charge you lower fares for booking early by offering something called ‘early-bird discounts’ or similar terms.

Though LCCs do not serve complimentary meals, alcohol and other beverages, they offer fares that are at least 50 percent lower than Full-Service Carriers. The only flipsides are: You may be unable to change the dates of travel sans paying extra and providing a limited baggage allowance.

Also, some LCCs land at airports a bit further than your destination, meaning you need road or rail transport to reach the place. Despite this, they help you save considerably on travel expenses. The money mistake to avoid in 2023 is making last-minute reservations, unless expressly demanded by a situation or work.

Book Online

Great online deals are offered by online travel agencies since the competition to grab customers has become hot over the last few years. Explore various packages and options for travel, sightseeing, accommodation, and business services offered by various websites, before making a choice.

However, remember to read the fine print clearly since heavily discounted packages may not allow cancellations or rescheduling of travel dates.

Holiday Saving Schemes

For some reason, holiday savings schemes offered by leading travel companies around the world remain undersubscribed. In 2023, you can avoid this money mistake and avail of a holiday savings scheme. Usually, a holiday savings scheme means, you book a package to a destination of your choice for a fixed price.

Once booked, you pay its price in equal installments to the bank or travel company for a period of 11 months to one year. At the end of the payment period, you get the holiday package of your choice or can avail of others. Your investment fetches you attractive interest. This translates to enjoying your holiday at a much lower cost.

Importance of Savings

Banks and financial institutions worldwide are reluctant to lend money nowadays unless you can provide a collateral guarantee. Regardless of whether you wish to open a small business, buy a home, get married, plan a vacation or need cash for medical treatment, money can be fairly difficult to find.

Given this scenario, one needs savings. According to various statistics, on average, an American household saves just US$ 1,000 per month. The highest savers are people in Europe.

Thanks to large salaries and benefits paid in the Middle East, countries like Qatar and the UAE also rank among those where people have higher savings, according to data compiled by the Paris-based Organization of Economic Cooperation and Development (OECD).

In Conclusion

Humans, by nature, are prone to mistakes and errors. Making mistakes with money is very common among all nationalities. Spending patterns differ according to culture.

While people from some countries believe in splurging money to buy goods aimed at impressing others, there are other nationalities who believe in thrift and leading humbler lifestyles. Yet others are more prudent with their spending.

In 2023, you can avoid a lot of money mistakes and by the end of the year, possess a great financial portfolio consisting of various investments that not only make your money work hard but also enable it to grow.

FAQ

What are the most common financial mistakes?

The most common financial mistakes include not creating a budget, carrying high-interest debt, failing to save for emergencies, not saving for retirement, not investing, impulsive buying, not understanding taxes, not having insurance, not having a will, and not seeking professional advice. These mistakes can lead to overspending, financial difficulties, missed opportunities for wealth building, legal and financial complications, and costly mistakes. It's important to be aware of these common mistakes and take steps to avoid them in order to secure your financial well-being.

How do you avoid common money mistakes?

Avoiding common money mistakes requires a combination of knowledge, planning, and discipline. Creating a budget, paying off high-interest debt, saving for emergencies, saving for retirement, investing, avoiding impulsive buying, understanding taxes, having adequate insurance, having a will, and seeking professional advice are steps to take to avoid making common money mistakes. Additionally, educate yourself about common scams and frauds and take steps to protect yourself from being a victim. By following these steps and being proactive about managing your finances, you can avoid common money mistakes and secure your financial well-being.

What are the 5 biggest financial mistakes you can make?

The 5 biggest financial mistakes are not saving enough for retirement, carrying high-interest debt, not having an emergency fund, not diversifying investments, and not having proper insurance. To avoid these mistakes, create a budget, pay off high-interest debt, save for emergencies, diversify investments, have adequate insurance and seek professional advice.

What is the biggest financial mistake?

Not saving enough for retirement is often considered the biggest financial mistake one can make. It can lead to financial insecurity and may force people to rely on government assistance or work well into their retirement years. Carrying high-interest debt and not having an emergency fund are also common mistakes that can have serious financial consequences. It's important to be aware of these mistakes and take steps to avoid them in order to secure your financial well-being.

How do you handle financial mistakes?

Handling financial mistakes requires acknowledging the mistake, assessing the damage, creating a plan, taking responsibility, learning from the experience, seeking professional advice, forgiving yourself and moving forward. Acknowledge the mistake and determine the extent of the damage, create a plan of action and seek professional advice if necessary. Use the mistake as a learning opportunity, forgive yourself and move forward to achieve your financial goals.