Part of maintaining a healthy budget is knowing when to spend and when to save. "You get to spend extravagantly on the things you love and cut costs mercilessly on the things you don't," Ramit Sethi, author of "I Will Teach You to be Rich," told CNBC.
Figuring out when it's OK to splurge or the smartest ways to splurge takes time, though. Even those who have hit impressive financial milestones have made their share of spending mistakes, mostly related not to what they bought but rather how they went about paying for it.
Here are three personal finance experts on their worst spending mistakes and what they learned from them.
Andrea Woroch has made a career of helping others create and stick to budgets. However, she is guilty of making some crucial spending mistakes herself. One of them: opening a store credit card for the discount.
"You can score anywhere from 10% to 20% off your first purchase using a store credit card when you apply," she says.
But there were some "pitfalls" she didn't consider when opening the account. "Your credit score will get dinged when opening a new account, which can be troublesome if you are in the process of getting a loan," she says. "Plus, store cards come with high interest rates, low credit limits, expensive fees, and limited reward options. So unless you shop there often, it's not that beneficial."
Using multiple cards made it hard for her to track spending. Now, she says, she sticks to a single cash-back rewards credit card and uses coupons for specific stores.
Bernadette Joy and her husband paid off $300,000 in debt in three years. To do so, the couple adopted a minimalist lifestyle. One of their loans was for an MBA program at UNC Chapel Hill. Joy borrowed $60,000, but because of the 6% interest rate, the amount had grown to $72,000 by graduation.
One of her worst spending mistakes, she says, was "signing up for a six-figure MBA program without understanding the terms of the student loan."
While she doesn't regret enrolling in the program, she does wish she had read the fine print on her student loan. "I would have shopped for other options," she says. "I would have saved up more money before I started and taken out less loans. Or I would have spread out finishing the program in a longer amount of time versus finishing it in two years."
Seattle consultant Obioha Okereke, 24, invested his first $150 when he was 18. Now he has a net worth of more than $150,000 and an investment portfolio worth more than $120,000. Okereke built his wealth by contributing to multiple investment accounts and curbing his spending. In order to keep himself from overspending or impulse buying he had to learn to "delay gratification," he says.
"With social media, I feel there is this constant pressure to portray a certain lifestyle, but it is important to live within your means," he says. "By delaying gratification, you put yourself in a position where in the future, your money will be able to do more."
Okereke admits he has not always been the best at doing this. When he was 21, he had $22,000 saved. To reward himself, he bought a used car — a 2009 Mercedes c300 for $11,300. "I always tell people it was the worst financial decision I ever made," he says. "It wasn't one I did a lot of research on. It was something that was nice and something that I thought would impress other people."
If he could go back in time he would still buy the car, he says. However, he would do more homework before making his decision.
"My biggest mistake was rushing the car-buying process, and as a result, making small mistakes that ended up costing me thousands of dollars," he says.
"Had I done more research, I would have not negotiated for the car based on the monthly payments but instead, the out-the-door price of the vehicle, because I ended up paying more due to this error. Additionally, I would not have taken a warranty from the dealership that cost $4,000 that I was only able to use a couple times."
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