4 Big Money Mistakes to Avoid

Don't end up making a financial decision you'll regret.

Managing your money can be complicated, and sometimes mistakes are inevitable. But there are certain errors that can be especially costly to your personal finances. Here are four big money mistakes you definitely want to avoid.

1. Living above your means

If you are spending more than you earn, you'll never be able to get ahead financially. It will be hard for you to save money for emergencies or retirement. Instead, you'll end up having to borrow to fund your lifestyle and will just get further and further behind over time.

To avoid this, you'll want to make sure you keep your spending well below what you earn. Ideally, you should keep your expenditures -- including needs and wants -- to no more than 80% of your earnings so you can save the rest.

2. Not living on a budget

If you don't have a roadmap for what you are spending your money on, chances are good that you won't end up spending it as wisely as possible.

In fact, you may devote too much money to things that aren't really that important to you since you don't realize how much you're actually spending on them. And you may shortchange yourself when it comes to accomplishing the goals you do care about.

Making a budget doesn't have to be difficult, and there are a lot of different budgeting methods, so you can find one that works for you. The key is to pick an approach and stick to it so your budget can create a roadmap to spending your money in a way that's aligned with your values.

3. Taking on a lot of high-interest debt

Borrowing money sometimes makes sense. For example, if you get a low-interest loan to start a business that helps you increase your income, that can be a good thing.

But there are certain types of high-interest debt, like payday loans, that can be really difficult to pay back. If you're taking out this type of loan or carrying a balance on a credit card with a high rate, you are committing a lot of your future income to interest costs -- which can make living within your budget really difficult in the future.

Whenever possible, avoid borrowing unless you are getting a very low rate and you are borrowing for something that will improve your financial situation in the long-haul. And if you do need to borrow, consider pursuing more affordable options, such as personal loans over high-interest options.

4. Buying a house you can barely afford

When you take out a mortgage to buy a home, you'll be taking on a debt that will take you decades to pay back.

If you stretch your budget to buy a house that's at the top of your price range, the large mortgage payment you are committing to could affect your ability to do anything else with your money during the decades when you're paying back your loan. And you could find yourself at higher risk of foreclosure and stressed all the time about being able to pay the bills.

A higher-priced home also comes with higher home-ownership expenses, including costlier utilities and property taxes, which can only compound your financial issues.

Fortunately, most of these mistakes are avoidable -- and they are correctable if you've already made them. Refinancing debt, for example, could help you to deal with high interest loans. And you could always move if your mortgage is a burden. The key is to realize that doing any of these four money mistakes could cost you your financial security and aim to avoid them accordingly.