By: Michael J. Swanson

Everyone is bound to make a few financial mistakes in their lives, but the more you plan, the more successful you will be. Here are six common financial mistakes and how to easily avoid them: 

Not saving
It is important to prepare financially for the unexpected by having an emergency fund. No one expects their car to break down or their heating to go out in their home, so it is essential to have money stowed away for the times when you need it most.

Use direct deposit to put part of your paycheck into a separate savings account so you are not tempted to spend the money you should be saving. By making it automatic, you will be able to set it and forget it until your emergency fund is built.

Once you have a substantial emergency fund, you can become more intentional and begin saving for specific goals like a down payment on a home, a new car or a family vacation. Paying cash is typically cheaper than financing because you avoid the interest.

Ignoring your credit score
Your credit score can have a significant impact on your life. People with higher credit scores are more likely to get better rates on insurance premiums, auto loans, mortgage loans and more.

It is easy to know your score, so there is no reason not to monitor and take action to improve it and keep it high. You can request a free credit report once a year from each of the three main credit reporting agencies: Equifax®, Experian® and TransUnion®. Many banks also offer free credit reports more frequently to their customers.

Going it alone
Managing your personal finances and accomplishing your financial goals can be challenging and overwhelming, so consider hiring a financial advisor to help. Expertise in this area is always worth it!

Determine the areas of your financial life that you would like an advisor to assist you with and find a financial advisor that specializes in those areas.

Make sure you do your research before hiring a financial advisor. They should be, at a minimum, a Certified Financial Planner (CFP). You can visit to check on your advisor’s status or search for a new advisor. To find an advisor, ask for recommendations from your family, friends and colleagues, read online reviews and meet with them in person before you hire them to see if they are a good fit for you and your goals.

Not setting spending limits
Create spending rules for yourself, write them down, and stick to them. Evaluate your spending habits and determine where you may need to cut back.

You may want to set a rule that you will only dine out once a week or only spend a certain amount on clothing each month. Spending limits are a great way to take control of your personal finances and be conscious of where your money is going.

Not getting life insurance
If you are married, you need to purchase life insurance to ensure your spouse will be taken care of if something happens to you. Life insurance is “income replacement.”

It is never too early to purchase life insurance. It is beneficial to purchase when you are young because it will be cheaper.

Stick with term policies rather than whole-life or universal policies because it is better to keep your investments separate from your life insurance.

Not paying off credit cards each month
When you use a credit card and don’t pay off the balance, the real cost of your purchases is much higher when you factor in the interest you end up spending. Rates are so high that you end up spending too much money on interest.

Pay off your credit cards each month so that your debt does not become unmanageable.

If you are underwater on multiple cards, you may be able to consolidate to a term loan with a lower interest rate to pay them off.

Avoiding these common financial mistakes can give you peace of mind and help you accomplish your financial goals. Even if you have made one or more of these mistakes in the past, it is not too late to get on track. Take some time to analyze your situation, create a plan and determine how you will stick to it to be on your way to financial success.