For a lot of people, money isn’t something you really learn how to use so much as you just copy what everyone around you is doing and hope they know more than you do. That might work fine if the person you’re copying is, say, a financial planner or Jeff Bezos. But the rest of us are picking up a lot of bad habits, and it’s affecting not just our financial well-being, but our emotional health, too.
An American Psychological Association survey found that money is a top cause of stress for Americans every year since 2007, with 72 percent of responders saying they’re stressed about money. Twenty-six percent of Americans (one in four!) said they’re stressed about money most or all of the time.
Most people think the easiest way to stop being stressed about money is just to have more of it. But barring a lottery win or stumbling across Blackbeard’s treasure, we’ll have to settle for being smarter with the money we do have. And, hey, if you start exercising better habits with the money you do have, you might just end up with more of it in the future.
Here are four common money mistakes.
Not Having a Budget
We tend to treat having a budget sort of like writing an outline for a paper in school. It’s a rookie move. As long as you’ve got a vague notion of how much money is in your checking account, do you really need to actually write down a monthly budget?
Well, yes. Even though only one in three Americans actually keeps a budget, it’s actually the best way to take care of your money. Even if you don’t think you need a budget—especially if you don’t think you need a budget—you should put one together. Think of it like a roadmap.
And it’s not as complicated as you might think. It can be as simple as totaling up how much money you make in a month, subtracting your regular monthly expenses like rent and transportation, putting 20 percent of what’s left in savings and using what’s left over for things like eating out and entertainment.
Not Having an Emergency Fund
“Why would I need an emergency fund?” you might ask. And just like that, you’ve answered your own question. Nobody ever needs emergency funds … until they do. If every last spare cent you make is going toward entertainment or even paying off debt, it’s easy to be blindsided by an unexpected medical bill or auto repair visit.
Start taking a small amount—say $50—out of every paycheck and setting it aside. Save up until you’ve got at least a thousand dollars. If you can afford it, keep saving to the point where you’ve got three to six months’ of your total living expenses safely tucked away. You probably won’t need it … unless you do.
Buying Stuff Based on the Cost, Not the Actual Quality
There are two ways to go about buying stuff you need. The first is to buy the cheapest possible version (“It’s all I can afford!”), the second is to buy the most expensive version (“You get what you pay for!”). Both of these are bogus.
First of all, if you’re buying the cheapest possible version of something, you’re most likely buying something of poor quality that will need to be replaced in the worrisomely near future, meaning you’re spending more money overall.
Second of all, expensive doesn’t always mean best. We live in an amazing age of user reviews, in which the experiences of dozens or even hundreds of previous buyers is at your fingertips. Five minutes of research before making a big purchase now could save you a lot of money down the road.
Treating Your Finances Like a Secret
It’s easy to think of talking about money sort of like talking about sex—a rude thing to do in polite company. Your retirement account or personal savings (or lack thereof) feels like a dirty secret.
That’s one of the reasons so much misinformation has been spread about money: Nobody talks about it. In fact, money is a pretty easy thing to talk about. As long as you mind normal etiquette (don’t brag about how much you’re making, for example), you can and should be discussing money with your friends, your family and even people you’re dating. The fastest way to correct the financial myths you might be believing is to talk them over with people close to you.
You can learn more about starting financial conversations here.
Tyler Huckabee is RELEVANT's senior editor. He lives in Nashville with his wife, dog and Twitter account.