6 money mistakes that could cost you thousands


Money mistakes can sneak up on you. You may not realize how much of an effect these mistakes can have on your finances until you've already lost a pile of money. If you learn to spot those financial faux pas and correct them early on, you can save yourself thousands of dollars – and a few sleepless nights.

Buying a house you can't afford

Everyone knows what a great financial asset a home can be. However, buying a house is not like buying some shares of stock. It's a huge investment of money, time, and energy. And if you overextend yourself financially to buy that house, it may end up being a pretty lousy investment. If buying a house plunges you deep into debt and forces you to turn to credit cards to catch up, you'll end up spending more on fees and interest than you can possibly make back from your "investment." Mortgage lenders typically recommend you limit yourself to a monthly mortgage payment that's no more than 28% of your pre-tax income. If you can't find a house for less than than, you're better off renting until your situation changes.

Not saving at least 10% of your income (and more is better)

Setting aside a reasonable chunk of your income on a regular basis can reap huge rewards for you. First, buying investments that have decades to grow will get you an enormous return thanks to compound interest. Second, having a savings account with a few months' worth of expenses can spare you from having to rely on credit cards during emergencies, which means you'll save a fortune on interest and other debt-related charges. And third, having money saved up gives you more flexibility in your lifestyle choices. For example, if you want to pursue a career in a field that has great earning potential in the future but pays very little today, having some cushion in the bank will make it a lot safer and easier to go for the dream job.

RELATED: Discover 20 unusual ways to make a quick buck:

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Dog-sitting, babysitting, or house-sitting

These jobs are always in high demand, and the best part: you can name your price and create your own schedule! Post an ad on craigslist, or use your friends' and family's connections to get your name out there. 

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Rent out your space 

List your apartment on Airbnb or another rental site, and make some easy cash by staying at a friends and renting out your place for the weekend.

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Share your space

Just as you can rent out your full apartment or house, you can also post a free room (or even just your couch!) on sites like Craigslist or Airbnb. This way you can split your living expenses -- and maybe even make a new friend!

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Sell your body parts

Now here's a weird one: Donate your hair, breast milk, or even plasma for a profit. According to Grifols, if you're healthy and weigh above 110 pounds, you can earn up to $200 a month donating your plasma to life-saving medicine. 

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Sign up to participate in medical tests and clinical trials. 

Universities constantly need volunteers to test new medicines and treatments -- and because the pool of willing participants is limited, there is typically a large compensation for being a guinea pig. 

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Participate in a focus group

Companies and organizations will pay you to join a focus group. These can be conducted in person, online, or via phone. You will most likely be reimbursed in cash or gift cards -- plus, you often get to test out fun new products! 

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Take online surveys

Similar to focus groups, you can get paid to give your time and insights on an online questionairre. Plus, you can do this from the comfort of your couch. 

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Bank on your sperm

Although we don't necessarily recommend this option, there is a very high demand for healthy sperm donors. Keep in mind some of the obvious drawbacks, but sperm donation is non-invasive and highly compensated. 

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Crowdfund your dreams

Crowdfunding allows you to raise monetary contributions from a large group of people who want to support your venture. Post your project or idea on a crowdfund site, like GoFundMe.com, and see the cash pile up.

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Become a tutor

If you're qualified, post an ad online or on a community board to tutor children on their school courses or for the upcoming SATs.

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Get a part-time job

Capitalize your free time (on the weekends or after work hours) by working a part-time job. A bartender, waiter, or Uber driver are all great options for an additional source of income -- and great tips! 

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Resell tickets

Take this suggestion at your own risk: If you're staying within legal limits, buy tickets low and sell high as an effective way to source additional money. (Just make sure to check your state and local laws first!)

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Rentafriend.com

You can sell anything on the internet these days... including your companionship! Get paid to go on a platonic outing for a few hours and enjoy your afternoon with a new friend. 

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Rent out your parking spot

Make sure to check with your landlord first, but if you have the option to park your own car further away, lend or share your parking space or driveway for the hour, day, or even month! 

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Keep a coin jar 

This one takes patience before a big pay out, but keep a spare jar or drawer for loose change that you usually toss anyway. It will keep it all in one place -- and those quarters do add up! 

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Make something to sell 

If you have a knack for arts & crafts, create jewelry or other handmade gifts to sell on sites filled with other thrifty vendors like Etsy

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Sell items online

This effective strategy requires low effort with a high return. Post photos of your used or non-used items on sites like eBay or Craigslist, and let the bidding begin! 

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Have a yard sale

Sell clutter you've been meaning to get rid of right in your front yard. This simple tactic is convenient, and guarantees a wad of cash right to your pocket.  

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Return past purchases

This tip may seem obvious, but is often overlooked: Take your recently-purchased items that are laying around back to the store for either store credit or a full refund. 

Recycle scrap metal and cans

Collect cans and scrap metal out your own garbage, basement, and street and bring to your local recycler to exchange your findings for money.  

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Ignoring your investments

A buy-and-hold investing strategy has a lot of advantages, not the least of which is that it requires far less time and effort on your part to maintain. However, that doesn't mean you can set up an automatic investing plan and then ignore it for the next 30 years. At a minimum, review your investments once a year and decide whether or not you're happy with their performance. This annual checkup will allow you to rebalance your portfolio and replace investments that no longer suit your needs, whether they're underperforming or they don't fit within your changing strategy.

For example, if you're near retirement and still have 70% of your portfolio allocated to stocks, then a sudden market downturn could wipe out a big chunk of your savings right before you need them to live on.

Timing the market

Yes, it's possible to make a fortune if you time your investments perfectly by buying stocks at market lows and selling it at the highs. However, it's also possible to make a fortune by winning the lottery -- and I still wouldn't recommend lottery tickets as a sound investment. Timing the market turns investing into gambling, pure and simple. Because no one can predict with certainty whether stocks will rise or fall, even professional investment managers get it wrong more often than they get it right.

To make matters worse, you'll have to pay commissions and possibly taxes each time you make a transaction -- and market timing typically requires lots of transactions. These expenses can severely erode your returns, even if you manage to time all your trades perfectly (which you won't). So unless you have a crystal ball that will tell you exactly what the market is about to do, stick with buying quality investments and hanging on to them for long periods of time.

Keeping all your money in savings

If you just stick all your money in your savings account, your bank will love you -- but inflation will eat away at that money over time until you have nothing left. Because inflation averages about 3% over the long term, you need to make at least a 3% return on your money just to break even. And it's safe to say that there is no savings account in existence that pays 3% interest. Keep just enough money in checking to cover your expenses and protect you from overdrafts, and only sweep enough into a savings account to cover emergencies (perhaps with an online-only bank, which will pay far more in interest). Then direct the rest toward retirement and/or brokerage account investments.

As a quick example, if you left $10,000 in a savings account paying 1% interest for 20 years, you'd end up with $12,202. If you left that same $10,000 in a tax-deferred retirement account that earned an average of 7% annually for 20 years, you'd have $38,697.

Not having goals

Where do you want to be in 10 years, financially speaking? How about 20 years? If you don't have a goal, you'll have a hard time coming up with a savings plan -- and that means your money will be flying out the door for expenses instead of quietly making you thousands of dollars in maturing investments. But if you set reasonable financial goals, and have a plan to meet them, you can accomplish amazing things. Maybe you'd like to have enough saved up for a down payment on a house within five years, and you'd like to be a millionaire within 30. Sit down with a financial calculator, come up with a saving plan that will get you there, and in 30 years you can be sitting on the porch of your paid-off house looking at a seven-figure bank statement. Now that's a financial future worth looking forward to.

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