4 money mindsets that trip you up

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

When it comes to money, beliefs can be as important as actions. In particular, four money mentalities — and the way they cause you to spend — can hurt your finances.

Following are descriptions of these four mindsets and tips for reconsidering them so you can save money.

1. ‘It’s only $20: What’s the big deal?’

Not paying attention to small purchases can add up to big deficits in your monthly budget. That $4 coffee each day comes to $120 at the end of the month.

Or, that $20 trip to the movies can add up to hundreds of dollars each month if you combine it with all the other 20s you drop haphazardly when dining out or going to concerts.

The best way to be smart with money is to know where every dollar is going. Come up with a monthly budget.

Next time you face an impulse purchase, don’t ask yourself, “Do I have the money for this right now?” Instead, ask yourself, “Does this item fit my budget?”

2. Shop till you drop

Is shopping a hobby, stress reliever or form of entertainment for you? Then you may be setting yourself up for real trouble.

Reframe your thinking by learning to view shopping as a chore or an errand — something you need to do in order to survive, and nothing more.

When you only head to the store for things you absolutely need — like groceries — shopping starts to lose its luster. Replace shopping with other hobbies and stress relievers, such as working out, participating in yoga or joining a book club.

3. Can’t pass up a sale

Even people who are extremely frugal or addicted to bargains can end up costing themselves money. Stop buying things just because they are on sale and ask yourself if you really need the items.

Likewise, stop buying the cheapest possible version of something if you will only wind up replacing it soon. Dirt-cheap sneakers, for instance, could wear out in a couple of months and you will end up buying another pair, which is a waste of money.

Learn to balance quality and necessity with price, and your spending will be more balanced.

4. Keeping up with the Joneses

Money is supposed to help us live the best life we can. In order to do this, focus your spending around personal priorities, not what all your friends and neighbors are doing.

If travel is important, who cares if you don’t have the latest smartphone, or that your car has 90,000 miles on the odometer? Stop wasting money on stuff that doesn’t matter to you, and instead channel cash toward saving for travel goals.

If you crave a better work/life balance, don’t buy more house than you can afford. Also, don’t worry about whether you dress in this season’s wardrobe. Live a more simple life so you won’t be chained to a desk for 60 hours a week trying to fund an extravagant lifestyle.

It’s your money and your life; spend both on the things that matter to you.

Paula Pant quit her day job, traveled to 32 countries, and became a successful investor. Her blog, “Afford Anything,” helps people crush limits, create wealth and maximize life. Follow Paula on Twitter: @AffordAnything.