Five money mistakes that cost a fortune – and how to avoid repeating them

Falling into the same money traps costs a fortune.

From paying for unused subscriptions to running out of money halfway through the month, it's easy to keep making the same mistakes.

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With Groundhog Day falling today, February 2 – the day that highlights how life can get stuck in the repetition made famous in Bill Murray's film – it's time to break the cycle.

Instead, take action to address the most common mistakes we all make.

Vix Monro, money coach and co-founder of the app Mad About Money, says: “People repeatedly make mistakes due to lack of knowledge, acting impulsively and falling back on convenience.

“Taking back control gives you a great feeling and puts the money back in your pocket.”

Here are five common financial pitfalls – and ways to skip them right away.

Avoid the subscription trap

Brits spend around £500 a year on subscription services.

Nearly half sign up for a subscription with an introductory offer with the intention of canceling it once it expires, Vision Express found.

But this doesn't always happen.

Vix says: “People think they might use it one day or get lured by free trials and forget to cancel.”

Become a detective and track down all your subscriptions lurking on bank accounts, credit cards, services like PayPal, on your phone bill and other online services like Apple Pay or Google Pay.

Make a list of them all and determine which ones you need to cancel.

Vix says: “If you don't use it, lose it. And even if you do use it, can you downgrade to a cheaper deal?

Be wary of free trials, where the company charges you once the trial period ends.

Vix says: “I try to avoid them altogether in case I forget to cancel before they start taking money. The companies rely on that.”

If you're tempted, you can set an alert on your phone a day or two before the trial ends to make sure you cancel the trial.

Buying on impulse

We're all tempted by an email that screams “huge savings!”.

Our emotions take over and we end up wasting money on things we don't need.

Shoppers make an average of seven major impulse purchases a year, spending around £185 a year on purchases they later regret.

Half of respondents from lender Vanquis said they spend money impulsively because they like to treat themselves.

Vix says: “We do it to improve our mood or see it as a reward, and online shopping makes it so much easier to fall into this trap.”

Break the habit by making sure you have a foolproof spending plan for the month, week or even every day so you know how much you have left for treats.

Instead of going straight to the online checkout, leave it in the shopping cart and return 48 hours later.

“Ask yourself if you still really want it?” says Vix.

“On a scale of one to ten, how much joy would it bring you? If it's not at least a nine, walk away.'

If you're still craving a pick-me-up, keep a box of inexpensive treats at home: a nice bubble bath, a magazine, or a favorite book.

Use that instead of your wallet.

If you know the impulse trap will eventually catch you, set aside a small amount of money to spend on a personal pick-me-up, but don't exceed that limit.

Stay faithful

If you stay with the same provider for car or home insurance, broadband, phone or breakdown cover, you will pay costs.

By not shifting your loyalty, you miss out on new customer deals with other providers.

Vix says: “People like the convenience of not having to weigh different quotes and providers.

“They're afraid it will be a hassle to switch, but there are websites that make it very easy.”

According to MoneySupermarket.com, you can save up to £580 a year just by switching car insurance.

Make sure you know what will be debited from your bank account and when it will automatically renew.

Set a reminder so you don't forget.

If you miss the date and find yourself receiving your new policy details, you have 14 days to cancel or negotiate for a better deal.

Out of money

If there is a big difference each week or month between reaching zero in your account and your next payday, break the cycle.

It comes down to having a spending plan, Vix says.

She added: “After you've taken out your most important items such as mortgage, rent and bills, look at what's left and divide it into 'pots' for the rest of your expenses.”

This means that a fixed amount is allocated for food, takeaways, clothing and other items.

Breaking it down gives you control and prevents you from overspending.

Find the best system for you. You can set aside cash for each in envelopes or open a free bank account that allows you to deposit money into a variety of pots available with some TSB, Virgin Money, Starling and Monzo accounts.

Vix says, “Personal finances are personal, so find the right method for you.”

Error in reimbursements

If you're frequently missing a credit card payment, racking up late fees, and charging extra interest on top of that, it's time to take action.

If you believe the charges are excessive or unfair, you may be able to contest them.

But make sure they don't get into trouble by setting up alerts and regular payments.

Vix says: “Automation is your friend. Automate payments for every invoice you can.

“Set them so they all come out on the same day, shortly after you pay, so maybe on the first day of the month.

“That's an easy date to remember, so you can handle any non-automated bills the same day.”

Once you have that in order, you will no longer miss payments and you will know how much money you have left for the rest of the month.

Do you have a money problem that needs to be solved? Get in touch by emailing money@the-sun.co.uk.

Moreover, you can join us Sun Money chats and tips Facebook group to share your tips and stories.