3 Money Mistakes People Make Over and Over

It's time to break the cycle.

At the start of the new year, we promise ourselves that we're going to make some changes to our lives, but that's easier said than done. Without a solid plan in place, we can easily slip back into our old habits. This can be frustrating or even dangerous when it comes to your finances.

If you're still doing any of the three things below, it's time to make a permanent change. Here's what you need to do.

1. Not paying attention to where your money goes

Knowing where your money goes each month is key to budgeting and saving. If you aren't tracking where your cash is going, you could be missing opportunities to rein in your spending and boost your savings.

There are a number of ways to track your spending, so you may have to try a few to figure out what works best. Some prefer old-fashioned pen and paper, while others set up spreadsheets to help them track their spending across various categories.

Budgeting apps are becoming increasingly popular because they do a lot of the work for you. They can break your spending down by category and spare you a lot of the math, leaving you with a high-level view of where your money is going that you can use to make future spending decisions.

2. Paying unnecessary bank fees

Monthly maintenance fees and minimum balance requirements used to be a standard part of banking, but that's not the case anymore. Online banks have exploded in popularity, largely due to their lack of fees and high interest rates on savings products. Many brick-and-mortar banks can't compete with this because they have to spend a lot of money to maintain their branch networks.

Owning a brick-and-mortar bank account may not cost you anything, depending on how much you keep in the account. But for those with low average balances, switching to a free online bank account could be a huge help. Most don't have minimum balance requirements, and their above-average interest rates mean you're much more likely to earn money than lose it.

But before you make this transition, be sure to switch any automatic bill payments you have set to come out of your old bank account so you aren't charged for late payments. And consider closing your old account, especially if it charges a maintenance fee.

3. Not building your emergency fund

Building an emergency fund should be everyone's top financial goal after paying their bills, but many still struggle to do this. Approximately 32% of people wouldn't be able to cover a $400 emergency, according to a government survey. This number has dropped over the last decade, but it's still alarmingly high. And even those who have saved $400 may find that it's not sufficient to cover all emergencies.

Ideally, you'd save at least three months of living expenses in an emergency fund to help you cover unexpected costs like a hospital visit, insurance claim, or your bills following a job loss. Some people feel more comfortable saving six months of living expenses or more.

If you just haven't made the time to set up an emergency fund, consider prioritizing it now. See if you can set up automatic transfers to a savings account each pay period until you've reached an amount you're comfortable with. And be sure to replenish your emergency fund every time you tap it.

For those who don't have an emergency fund because they don't have much cash to spare, things are trickier. Take a look at your budget to see if there are any areas where you could cut back spending, even temporarily, to enable you to build your emergency fund. If not, explore opportunities to increase your income. Working overtime or starting a side hustle could give you the extra cash you need. And if it's too much for you to keep up with long term, you can always stop once you've established your emergency fund.

It can take some time to find a new bank account or savings strategy that works for you, so don't get discouraged if you try something and it doesn't work for you right away. Try different approaches until you find a solution that fits in with your lifestyle.