A century ago, the best savings plan available was a good thick mattress to stuff with fistfuls of hard-saved notes. These days, most of us have at least a passing understanding of financial planning, but some of the following money mistakes can leave you as badly-off as the mattress stuffing generation, perhaps worse. Read on to find out if you are endangering your financial future by committing any of these mistakes.

Not having financial goals or plans

Goals and Plans are different from Intentions because they include a concrete action plan. We can intend to be financially secure, but without plans to save and invest our income, we cannot be assured of success.

Your financial plan should include the answers to questions like “what percentage of my income can I save each month”, “what are my fixed overheads” and “are my goals realistic and if not, what can I do about them”.

Consider it a reality check. If you are 30, and your intention is to own your own home by the time you are 35, but you save a thousand dollars a month, you will have $30,000 saved in cash by 35. Is this enough for the down payment of the property you intend to own? If not, can you do something about it?

Remember, plans don’t only apply to big-ticket items like homes and yachts. An intention to pay-off your study loan, or to take a vacation, also needs to be factored into your financial plan!

Failing to Budget and/or Stick to your Budget

This may sound obvious, but is often overlooked in the rush of day-to-day demands. Worse yet, many people write a “dream budget”, which has no relationship to their actual expenditure.

Start by keeping a record of your expenditure for a month or two, you will need to be very attentive to detail; keep every single receipt, or bring a little notebook with you (most smart phones have a spreadsheet program which you can use instead).

At the end of 2 months, review your expenditure. Identify the categories in which your expenditure is particularly high, and what you think you can do about them. For example, if you are spending 40% of your monthly income on food and drinks, is this because you frequently find yourself dining at restaurants?

Finally, allocate your income to the different spending categories. In the beginning, aim for figures somewhere between your dream budget (where you save half your income and never shop at all) and your actual expenditure (where you dine out all the time and save nothing each month), you can revisit your budget as your get better at money management, and start including long-term financial goals!

Failing to Save

This little financial mistake sounds innocent enough, after all, so many of us have “dipped into” our savings on special occasions, or implemented our own flexible savings plans (save whatever is left at the end of the month), and it is easy to overlook the value of savings. But anyone who has been caught out by unexpected loss of a job, or unforeseen medical bills, will tell you how valuable savings really are.

If you are not disciplined enough to save, consider taking up an investment linked insurance plan. These plans are usually low-risk-low-return and will give you health coverage to boot. Most local banks also offer a regular savings plan, which will transfer a fixed amount from your salary into a savings account automatically each month.

The importance of saving really cannot be overstated, whether you are saving for that dream vacation, that big-ticket item, or saving for a rainy day, it is vital that you get into the habit of spending less than you earn, and setting aside what you don’t spend.

Heavy Reliance on Credit

Credit is not evil, in fact, with zero-installment payment plans, and assorted dining and purchase rebates, using your credit card can help you save money and stay within your monthly budget. But if you find yourself going from minimum payment to minimum payment each month, or making only interest repayments on your credit card bills, it is a sure sign that you are buying trouble on credit.

Recommendations vary, but all experts agree that credit card bills must be paid on time (late charges are usually hefty, and leveled regardless of how little is outstanding on your bill), and that minimum-sum payments are a recipe for disaster. Commit no more than 30% of your credit limit to purchases made on payment plans, and if you are locked into a payment plan, make sure your other monthly charges are cleared punctually.

Big Ticket Loans

Like credit, taking a big ticket loan is not inherently a bad thing, but taking a poorly planned loan can impact your financial well-being for years or even decades.

The only way to ward against this is to shop around the various loan offerings, and only take one up when you are sure you can afford the scheme. Things to look out for include interest rates (flexible or fixed), loan quantum, grace period (the bank won’t tell you, but a quick check of online forums may give you an idea of which banks are more “tolerant” of missed payments).

Careful consideration is always necessary. For example, before taking a graduate-school loan, are you at least reasonably confident that you will earn enough after graduation to repay the loan? What can a post-grad in your field command? Is a loan the only way or are there grants or work-study programs?

When it comes to property loans consider the following; Are you sure you aren’t getting yourself stuck in negative equity? Can you afford the monthly payments comfortably? Are you planning to live in the property or rent it out (rental income can sometimes offset property loans)?

Each and every big ticket loan comes with its own complications and considerations. Make sure you have considered them all carefully before committing yourself to any loan schemes!

Failing to Grow your Money/Waiting to Grow you Money

If inflation (the increase in prices) outstrips interest rates (the money you earn on your deposits), as it usually does, the value of your money, if left in a bank, will eventually be eroded by the higher costs of living. This is a plain and simple fact that is too often overlooked by people who believe that they are doing a good job of saving, and setting aside money for retirement.

A particular danger to fresh graduates and young people is the idea that investing can wait until a nest egg has been built. If you share this view, consider the following: Jane invests $1,000 a year in stocks for ten years and stops investing. John waits ten years to start investing, and then puts in $1,000 a year. How long before John catches up to Jane? The answer is that given the historical returns of the stock market, John will never catch up. Thus, your biggest asset is time, and there is no time like the present to begin growing your money!

Bad Investing

Worse than failing to grow your money, is making bad investment decisions. When you fail to grow your money, inflation erodes the value of your savings, however making terrible investments can wipe out your savings altogether.

Before you make any investment, make sure you have done your research thoroughly. You should know what types of investments you are comfortable with (stocks, bonds, even real-estate), and at what levels. If talk of an investment portfolio makes your head spin, find yourself a reputable financial advisor, and leave it in their good hands. You pay them a commission up front, but it is a fraction of what you stand to lose if you jump in without understanding your investments.

Now that you know which mistakes to be extra cautious about, you are all ready to get started with Budgeting, Saving, and Growing your money.

Remember to check back for more useful financial literacy articles!