9 mistakes everyone makes when managing personal finances
Words by Alanya Smith
Photos: Getty
Having extra cash on payday can feel like a reward but spending it all at once can leave you struggling for cash. Managing your personal finances doesn’t have to be difficult and can be the trick to contributing to, rather than taking away, money from your bank account.
How many people are struggling to manage their finances?
Being worried about money is a concern that’s weighing down people of all ages. A recent study from Go.Compare Money found that three in 10 people were worried that they didn’t have enough money in their savings, with people aged 55 to 64 most worried about saving for their retirement, whereas 18 to 24 year olds were most worried about meeting mortgage payments.
Adding to your savings and sticking to your budget is a leading priority for many consumers who are struggling to cope with the rising cost of food bills, utility rates and inflation. Asking for help or searching for financial guidance doesn’t have to be an embarrassing burden, but it could make a big difference to your financial and personal wellbeing.
Why is managing personal finances important?
Living without the added stress of bills and debt protects your mental and emotional health. Relieving yourself of the anxiety of relying on bank account overdrafts or being strapped for cash after an unexpected bill can make you feel more relaxed and in control.
A report created by Schroders identified that 74% of people stated that their financial circumstance impacted their mental wellbeing, with 70% of people worried about the cost-of-living crisis. Many people stated that they lacked confidence in growing their finances and wanted it to keep it as a priority in their future goal setting.
Here, financial experts share their advice on the biggest fails you’re probably making when managing your finances, including how to regain control through simple hacks.
9 common mistakes you’re making with your personal finances
1. Paying for services you’re not using
With streaming services and automated subscriptions slipping through your bank account, it’s no wonder each month you don’t realise that you’re wasting money on services you’re not even using. If you’re not checking your outgoing payments, you might be guilty of losing money when an easy check could help you take back control.
Add the renewal dates to your diary so you can make a decision about whether you want to continue with it.
Ebony Cropper, a money saving expert at Money Wellness, thinks it’s time you took charge over your subscriptions: ‘Taking back control of your money doesn’t have to mean big sacrifices. Sometimes it’s the little changes that make all the difference.
‘A lesser-known way to save is by reviewing your hidden services. For example, many people unknowingly pay higher fees for things like delivery, online transactions, or even silent account charges. Doing a 10-minute ‘spring clean’ of your accounts by checking bank fees, app charges, and automatic renewals often uncovers money you can redirect into a savings pot straight away.’
2. Mindlessly making contactless payments
With card payments becoming transactionless and smartphones now using our faces to make a purchase, spending money has become as simple as a tap of a card. If using contactless payments is your go-to method of shopping, it may be worth switching up and using cash to see just how much physical money you’re wasting on that extra coffee.
Simon Phillips, managing director at No1 Currency, says that cash could be your secret savings tool: ‘When it comes to keeping your spending under control, cash is a bit of a secret weapon.
‘Mobile and card payments are designed to be effortless. But on a night out, that ease can be a liability - it makes it too easy to overspend. If you want to set yourself a limit - and stick to it - just take out that amount in cash. Handing over notes and coins when you buy something is the best way to be mindful of your spending.’
3. Letting valuable items collect dust in your house
Selling things in your house has never been easier and more efficient with the skyrocketing success of apps like eBay, Vinted and Depop now dominating app stores. That jumper in the corner of your bedroom may be the thing that pays for your next cocktail on a night out, or those books you’ve read might give you the money for your next book splurge at Waterstones.
Pawnbroker and owner of company Prestige Pawn, James Constantinou, shares: ‘Selling items from your home offers a convenient and surprisingly easy way to make some extra cash. Many households are full of valuable things we often overlook, from books and jewellery to old coins and even lawn mowers. Time and effort are saved as you don’t need to go out with knowledge on the lookout for valuable items in mind or pay for storage as your house is your stockroom.
‘As well as earning you some extra cash, the process also helps declutter your space by turning unused possessions into something that could be praised again. Ultimately, selling items from your home is cost-effective and efficient, especially if you know what to look out for.’
4. Avoiding adding to your savings
If adding money to your savings is the last thing you do on payday, it’s no wonder you might be short on cash by the end of the month.
Liz Hunter, commercial director at MoneyExpert, says that automating your savings can make the process stress-free: ‘Life is busy – which means transferring money into your savings account might be the last thing on your priority list.
‘If you’re able to, setting up a standing order from your current account to your savings account is a great way to automate the savings process. Scheduling it to go out immediately after you get paid is a good idea, too. This means you’ll make saving a priority over your non-essential spending, rather than just saving whatever happens to be left in your account at the end of each month.’
Ebony agrees that adding to your savings can be exciting rather than a bore: ‘Another easy win is to ‘pay yourself first’. Setting up a small transfer on payday into a savings pot - maybe even labelling it something fun like ‘holiday fund’ or ‘future me’ - makes saving feel like a treat rather than a chore’
Taking back control of your money doesn’t have to mean big sacrifices
5. Not getting the best rate for your rising bills
With utility bills on the rise, they can take up a large chunk of the money you take home each month. Not getting the best rate for what’s right for you could mean that you’re wasting money by not making a simple switch.
‘Bills might be essential, but that doesn’t mean they’re set in stone,’ Liz says, ‘Setting aside some time to go through your utility, broadband and phone bills a couple of times a year, or when they're coming up for renewal, could potentially save you hundreds of pounds.
‘Use comparison sites to see if you could reduce your monthly or annual outgoings for broadband, TV and mobile services, as well as car, home, life and pet insurance payments – especially if you’re out of contract or it’s due for renewal. If you do spot cheaper deals, it’s always worth haggling with your current provider, who’ll often be keen to keep you on board.’
Kevin Marshall, CPA and lead contributor at Smithii Tools, says ‘Call your internet or insurance company once a year and ask for a loyalty discount.
‘It takes ten minutes, costs nothing, and often saves you more than any coupon clipper ever could. If they refuse, switching providers can help you lock in a first-year promotional rate, keeping extra dollars in your pocket.’
6. Over splurging on holiday
Everyone deserves a chance to relax and unwind, but overspending on holiday can be a lot more common than you think. According to a study conducted by Post Office, 67% of holidaymakers shared that they had overspent during their last vacation, with many blaming the rise of inflation. Setting firm limits to daily spending can make sure that your next holiday doesn’t cost you your next vacation.
‘Don’t ruin that big trip to Ibiza you’ve been saving for all year by blowing your entire budget on the first day!’ Simon says, ‘The secret to sticking to your budget on a holiday is to exchange your chosen amount of spending money for local currency before you travel. By taking local currency notes with you, you can keep to whatever limit you set for each day - whether that’s 100 Euros, 1000 Thai Baht or whatever.’
7. Ignoring your bank statements
Something as simple as checking your invoices and bank statements can help you spot the black hole where all your money is going missing. Buying a coffee every day? Try making your own and taking it the office. Avoiding bank statements is a common pitfall many people make when managing their finances. Liz says: ‘It might seem like an obvious one, but regularly checking your bank accounts means you’ll know exactly what’s coming in, what’s going out and what you can afford to spend right now.
‘Even better, it means you can stop problems in their tracks. Whether that be fraudulent charges or simply being a little too close to your overdraft (and the fees that come along with it) than you’d like. So, make checking your accounts a priority. This might be a weekly sit-down session where you review what you’ve spent and what you’ve got left to spend – or, if it feels more achievable – a quick balance check once per day.’
8. Buying without thinking first
Do you really need another t-shirt with the same design on them? Or another cooking book that you’ll rarely use? If it’s something that isn’t essential, take a minute to think if it’s worth the cost before you buy it. Something as simple as asking yourself if you really need something could be the trick to making more mindful purchases, Liz says: ‘Shopping for items you don’t need – but spontaneously notice – can add up fast.
‘Our latest research on Buy Now Pay Later (BNPL) services revealed that 15% of adults are missing important bill payments to ensure they have the money to meet a BNPL deadline, while one in six (16%) are missing BNPL payments regularly.
‘The danger of BNPL services is that they encourage you to overextend your finances and buy things you might not usually be able to afford. Many people don’t realise that BNPL is a form of credit, which means missed payments can have a detrimental impact on your credit score and impact what you’re able to borrow in the future.’
9. Missing out on free money
If you haven’t checked if you’re eligible for any financial support or tax deductions, you’ve only got yourself to blame.
‘Taxes are not just a bill; they are also an opportunity,’ Kevin says.
‘Look for child credits, education deductions, or mileage write-offs if you drive for work. Claiming even one of these can turn April into a cash-back moment rather than a panic attack. When the refund arrives, deposit it directly into debt payments or savings so it doesn't disappear on impulse buys.’
Want to be a more mindful buyer?
You don’t have to live in fear of overspending if you make simple, quick changes to your everyday routine to add to your savings. Liz shares her top four tips for becoming a more intentional buyer:
1. Create lists
‘When you think of an item you genuinely need, add it to a shopping list. Use this list to control what you spend your money on and reconsider impulse purchases – if it’s not on the list, do you really need it?’
2. Use the 48-hour rule
‘If you spot something you really want to buy but don’t necessarily need, wait 48 hours before buying. This gives you enough time to consider the purchase and research other options to make sure it's worth spending your money on.’
3. Research & compare prices
‘If you have something specific in mind, look for the best deals, compare prices online and seek out discount codes before buying.’
4. Beware of sales & special offers
‘Avoid being taken in by extreme discounts. If you don’t need an item, then you aren’t saving money by getting it at a lower price.’
Items in your house could be secret cash pots
If you’re not sure what to sell, or if things in your house are sat collecting dust, selling them could be the perfect spring clean that can add to your bank account. James recommends taking a closer look at what you own: ‘I would advise beginners to pay close attention to the condition of the items they want to sell.
‘Clean, well-kept items will generally tend to fetch higher prices and are more appealing to collectors and buyers.
‘Even everyday items like old phones, furniture, or gardening tools could be worth far more than expected,’ James adds, ‘Family heirlooms, signed first-edition books, or outdated electronics may also all hold hidden value, especially among specialist collectors looking for rare items.
‘The key is to research and appraise anything that seems rare, unusual, or well-preserved – you might be sitting on a small fortune without knowing it.’
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