Don’t Make These 4 Financial Mistakes!

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common financial mistakesThere are a few issues rarely mentioned on popular survival blogs and forums, and one of them is finances. A discussion of everyday carry, best household defense weapon, or bug out locations will have thousands of responses, but finances? Yeah, silence.

The health of any household rests on financial stability and it makes sense that a serious prepper would take financial survival just as seriously as any other survival component. That’s smart prepping and smart living, regardless of future events.

In my current work on a financial survival book, working title: The Frugal Family’s Almanac, I realized just how frugal I am, with my main splurges being restaurant meals when I’m too busy to shop for groceries! However, as a small business owner, I’ve made plenty of financial blunders over the years and have had to learn some difficult lessons the hard way on our journey toward financial survival. From my own experiences, here are 5 that have had the most impact on me and my family.

1. Not tracking expenses for tax purposes

I’ve written about the importance of staying on top of taxes, but over the years, I have a less than stellar record in this particular area. When you have a young family, homeschool, and run a business, inevitably something important falls through the cracks and a few times, it was the records I kept for my quarterly and annual tax reports.

Panic-stricken, I would shuffle through manila envelopes filled with miscellaneous receipts, track down checkbook registers, and comb through 12 months of bank statements and scattered mileage records. Those harried scenes could have been avoided if I had used a system for organizing receipts and jotting down mileage and expenses, I could have sailed through each and every tax season with ease.

Fortunately, my tax professional, Suzanne, was not only highly competent but ever so patient with me and my last-minute drop-offs at her front door.

2. Not staying in touch with Suzanne throughout the year

If you have an accountant or have used a tax service, you are probably in touch with them only once or twice a year. That was my relationship with Suzanne, until I wised up.

One year she phoned us, late on April 13, and asked us questions about home improvements we had made the prior year. She explained that we hadn’t reported anything to her in that category but high-ticket improvements to our home were tax-deductible. My husband and I quickly scrambled to find documents for the updated lighting and new flooring we had installed ourselves, we saved a bit on taxes, and learned that contact with Suzanne was something we needed to do throughout the year, not just the first week of each April.

When our move to Texas was a sure thing, I got in touch with her regarding any tax issues I might need to deal with in Arizona. She advised me on the need to, ahem!, keep records of our move since many of them would become tax deductions.

If you have a tax professional and they have proved themselves to be smart, reliable, and up to date with everything tax-related, I encourage you to stay in touch with them, especially if you anticipate any of these events in the coming year:

  • Getting married or divorced
  • Having a child or adopting one
  • Start a business
  • Change jobs
  • Searching for a job
  • Retiring
  • Moving
  • Inheriting money or property
  • A tax audit
  • Bankruptcy
  • Home foreclosure or short sale

3. Underestimating our taxes owed

If you are an employee of a company and only file a W-9 form with the IRS, you will never know the joy that comes with figuring your own taxes and paying them directly to the federal government. Since my husband and I have both owned businesses over the past 20 years, we get to experience this multiple times each year.

Some years I underestimated my earnings and taxes owed. Trust me, you never want to be surprised with a huge tax payment, even if you have a healthy amount of savings set aside. Before we connected with our own tax professional who could give us reliable tax advice, we were just winging it, and two years in a row, I cried when faced with several thousands of dollars owed. My bad.

And, it’s not just underestimating taxes that causes problems. Underestimating the cost of health insurance, the financial impact of insurance deductibles, miscellaneous expenses related to our kids sports and school activities, and the list goes on.

Now, I keep track of earnings, estimated taxes, and over-estimate how much money we’ll need, and that’s where a focused savings plan comes into play.

4. Not establishing saving money as a top priority sooner

When we became serious about preparing for an uncertain future, it was obvious that financial stability was going to be a part of those preps. At that time, we got serious about cutting down on expenses, finding ways to earn more money, and then saving as a priority. It made sense to me that another significant downturn in the economy, from “minor” to a complete collapse, required us to have no outstanding debt, money in the bank, and multiple sources of income.

Now, as soon as any money hits our bank account, I transfer as much as I can into savings. Now, that isn’t a way to get rich, since savings accounts pay virtually no interest, but it’s important to have enough liquid cash on hand for emergencies and that “6 month living expenses” financial advisers recommend.

I just wish we had started all this a few years sooner.

What did I do right?

I’ve made plenty of mistakes with managing finances, but I always had one Ace in the hole. I’ve always, always had a side gig. When I was a trainer for a large school district, I started a direct sales business. That business became so successful that I was able to quit my school job. As time passed, I started The Survival Mom blog and that income allowed me to leave direct sales. Now that I have a successful internet-based business, my next side gig is going to be teaching others how to blog for profit.

READ MORE: “3 Strategies to Making More Money from Your Side Gig

Improving your own financial survival will always be about saving a little more, spending a little less, and earning a little, or a lot, more. There are no shortcuts.

common financial mistakes

Helpful Resources:

  • Check out my monthly series of past articles, “52 Weeks Savings”, with discounts, bargains, and deals for each month of the year. Here’s a sample month for June’s best bargains.
  • Learn more about the 52 Weeks Savings Challenge here and customize it to your own income and circumstances with these tips.
  • Join Survival Mom’s 52 Weeks Savings Club on Facebook. We’re over 2500 members and going strong!
  • Dave Ramsey has solid advice for taking control of your finances. I recommend his basic book, The Total Money Makeover for an easy-to-follow plan and a quick, motivational read.

7 thoughts on “Don’t Make These 4 Financial Mistakes!”

  1. Nancy in Alberta

    Very helpful! Much of this I just hadn’t added up. I don’t tend to think of taxes as a way to save! It seems like more of a drain than a savings avenue, but you make it clear that we don’t have to feel like victims, and we do have more control over the process if we stay in touch with the inflow and out-go! =)

    My problem with the side gig thing (love that term!), is that I feel all but brain dead when it comes to ideas. We homeschool, too, and I believe I could help my daughters train further for homes of their own with this kind of idea. A couple of them already know they don’t want to have an outside career, but they do love learning, and a challenge. This sounds ideal for them. Gotta think more on that.

  2. Nope! Only the sales tax might be deductible. Italian marble floors are not deductible nor is a golden candelabra. You are still responsible for the errors in your return if you get audited.

  3. What are your thoughts about paying off mortgages? The interest rates are so low, we’re not sure it makes sense. On the other hand, it’s the only debt we have and it would be so much fun to be debt free. We’ve considered some real estate investments instead of paying off the mortgage, but would love to hear your thoughts!

  4. I would add not trusting your finances to a money manager to this list. It’s much better if you can manage it yourself by being involved in the markets. If you put it in the hands of somebody else, they get paid regardless of whether they grow or lose your money. It can take a lot to learn the markets and stay engaged, but is so much better for your finances in the long run.

  5. I am interested in learning to blog for profit. I can’t find anywhere on your website that gives more info on where you are offering that so I thought I would try to contact you here. Can you please let me know where to get more information on the services that you offer?

    Thanks so much!

    1. The Survival Mom

      I don’t teach blogging, but there is plenty of information on sites like problogger.com that can help you.

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