As I’ve mentioned before, I get tons of email from people describing the personal finance problems in their lives, commenting critically on things I’ve written, and offering up their own stories of success. Not only that, as The Simple Dollar has become more and more popular, I’ve had more and more opportunities to talk about personal finance with people face to face.

What amazes me is that I see most of the same problems pop up time and time again. Sure, the specifics of the story change, as do the severity of the situation, but these same twelve items come up in almost every story I hear about financial problems. Even worse, quite often multiple items from this list appear in the same tale of woe.

I’m not immune to them, either. At the time of my own financial meltdown, I was guilty of the majority of these things. It was only due to a commitment to fixing my financial situation that I was able to overcome these mistakes and set them right.

Here they are, the twelve biggest mistakes I witness and hear about time and time again.

Concern rarely extends beyond the next paycheck or two.

These are the people who live from paycheck to paycheck. Their next paycheck or two will cover the immediate bills. If there happens to be some money left over, it’s spent on frivolous things. These are the people who are constantly hitting the ATM to check their debit card balance so they know how much they have to spend or the people who juggle credit cards that are maxed out. The only thing that matters is the next paycheck and the brief breathing room that it provides.

What’s the solution? The best way for people in this situation to begin to escape is to set up an automatic savings plan of some sort. The automatic savings plan would scrape a small amount of money out of that checking account each week and put it somewhere safe. The point isn’t so much to build up savings (although that’s very useful and valuable), but to slowly wean yourself from spending everything that you bring in.

Only one person in the family knows where the money goes.

Most families have one person that’s largely in control of managing the money – and that’s fine. It can be very useful to have a family “accountant” – a person that manages the checkbook, makes sure the bills are paid, and so on. This can actually be a very good thing, particularly if one person in a family is particularly detail-oriented.

The problem occurs when this leads to financial atrophy in the family, where no one but the person running the checkbook knows where the money goes or is involved in the decision-making process. While it can be very easy to just let that person run things, it can be very dangerous, too. That person might not be saving appropriately for family goals, might be leveraging credit card use in order to allow everyone to keep spending as they are, and so on.

What’s the solution? The best solution is for partners to have monthly meetings about their financial situation. Just sit down and talk about it. Go through the checkbook registry together and the bills together and just make sure that everyone is aware where the money is going and why it’s going there. Then, if there are problems, they can be discussed and handled appropriately. Doing this goes a long way to ensure that nasty surprises – like hidden credit card bills and so on – don’t crop up.

Partners don’t talk about their shared goals.

When my wife and I were first married, we basically didn’t talk about our shared goals – and when we did, it was mostly just bumping heads because our goals weren’t in alignment. We both had vague plans about having children and owning a home, but anything beyond that – and anything specific on either of those two topics – varied greatly between the two of us.

It wasn’t until we started actually sitting down and talking about our shared goals that things began to click into place. I began to realize that some of my dreams didn’t match hers at all, and vice versa. I also began to understand that when we sat down, talked about our different dreams, figured out the areas where they lined up, and came up with clear and specific goals that we both shared, it engaged both of us to make it happen. Rather than fighting through gentle resistance to get what I wanted, I found a cheerleader that pushed me onward to get what we wanted. The best part? What I wanted and what we wanted really weren’t all that far apart. It just took sitting down, talking about things, and making things concrete and specific to turn resistance into support – to turn vague ideas and dreams into action.

What’s the solution? Sit down with your partner and talk about where you want to be in five years. In ten years. In twenty five years. Figure out what each of you wants individually, then look at the areas where they overlap. Compromise a little bit and come up with detailed plans for things that you both want and you’re both willing to work towards.

There is no budget or spending limit, particularly on non-essential items.

I’m not actually referring to a hard and strict budget here. Instead, I’m talking about not keeping track of – and keeping control of – one’s spending on nonessential items. Many people simply don’t bother to keep track of their spending on such things in any way, shape, or form, and they’re often shocked at how much money has been frivolously spent when the credit card bill comes due. Then they pay it and forget about it again – it’s more important to keep up with the Joneses, you know.

My wife and I did this for several years. We kept our spending separate and didn’t really worry about how much we were spending. Quite often, this would result in a mess, where there were bills to be paid and we’d both spent more than we should. Eventually, clear communication got us out of this routine and now we both spend in a much more rational fashion.

What’s the solution? Put everyone on a spending allowance. Seriously. Each person gets a certain amount to spend per week (or month). This requires honesty and commitment from both sides, so the best way to do it is to regularly talk about it. Agree to a spending cap for each of you and then discuss any spending beyond that.

Family members and friends loan each other money without thinking about the consequences.

Many people talk about the guilt, anger, and mistrust that they feel when it comes to debts with their family. They either feel bad (in some fashion) about an inability to pay back a family debt, upset because of the expectations that others have of them in terms of loaning money, and anger and mistrust when people don’t pay back the money that’s loaned.

Luckily, I’ve largely been able to avoid this. On the occasions when I’ve wanted to help out family members, I’ve been smart enough to make it a gift.

What’s the solution? Don’t mix lending with family. If you want to help a family member with their financial situation, make it a no-strings-attached gift and forget about it. If you’re under the expectation that a family member is going to pay you back, you’ve changed a loving and caring relationship into a business-like lender-borrower relationship. Are you close and familial with your mortgage lender?

There is no emergency fund.

Many people are often completely blindsided by unexpected expenses. It’s a disaster if their car breaks down or they lose their job – immediate panic mode.

I was once in this very situation. A truck breakdown in 2005 was extremely costly, as was the need for new glasses in about that timeframe. I had to worry and plan and move money around in order to be able to easily deal with both of those situations.

What’s the solution? Well, it’s pretty easy – build an emergency fund. Start an automatic savings plan – as discussed in the section about living paycheck to paycheck – and don’t touch that money unless there’s a need. Having that flexible cash on hand makes emergencies much easier to handle. Plus, such an emergency fund (once it becomes normal and routine) can be the beginnings of a bigger savings goal, like saving for a house down payment.

There is no plan for the unexpected passing or disability of a key wage earner.

Ask someone what they’d do if the primary wage earner in their home suddenly passed away or became severely disabled and you often see a panicked “deer in the headlights” look. Further down that line, I hear from a lot of people who are having serious problems following the incapacitation or death of a key wage earner.

What’s the solution? Surprisingly, it’s not that hard to protect yourself against both of these events. A nice healthy emergency fund helps with the short term of either scenario, and a solid life insurance policy and a long term disability insurance policy will take care of the needs in each situation. If you’re young and in reasonable health, both types of policies can be quite cheap and they protect you against any such disaster. A long term care policy (one that covers the costs associated with your care if you require significant medical and personal care to survive) can also be useful.

Children are kept away from money concepts.

Many children (even through the teen years) have only a minimal understanding of money. They view it as merely a way to get stuff they want, not as a way to translate your hard work into a home, food on the table, clothing, electricity, future plans, and a few pleasures.

Instead, many children get an allowance that isn’t based on any effort and are allowed to spend it entirely on their wants. In this situation, the money has little meaning, and it’s made even worse when it’s supplemented by parents who step in with more money all the time.

What’s the solution? Have your children earn money in exchange for tasks done, and eventually build them towards small-scale entrepreneurship, like in the book Young Bucks. When they do earn money, have them set aside some for giving to others and for long-term savings goals so that they understand the usefulness of saving the money.

There is a pervasive anti-frugality pro-consumerism attitude.

Many people find themselves eschewing frugality. They buy heavily into the idea that “you only live once” and that “settling” for the best buy or the least expensive option is foolish. People who believe in this often are put under peer pressure to spend and often put pressure on others to do the same – you can’t live cheap if you’re going to be one of the boys, right? You gotta have all the toys.

I used to do this all the time. I’d buy expensive golf clubs and gadgets and always had a strong collection of Magic: the Gathering cards. Living cheap? Come on … that was for losers. What a fool I was.

What’s the solution? If you’re constantly bombarded with the sense that you need to spend money to fit in with a social group, find another social group. Engage in activities that are personally appealing to you that don’t revolve around spending money and seek others who are interested in those things. If you find you need to spend to feel good about yourself, seek out low-cost alternatives – hit the library if you’re a book or music nut, for example. You may also want to seek some degree of counseling if your self-worth has actually become tied to the stuff that you have.

Employee benefits aren’t well understood or utilized.

Most employers offer a lot of nice benefits that are largely undiscovered – or they’re underutilized by the employees. At my previous job, one thing I was quite good at was discovering employee benefits that we were entitled to – and my coworkers were often amazed at the stuff I found. Free sports tickets. Free car usage. Free prescription benefits and medical reimbursement accounts. Free meals. Free lectures. Free books and reading materials. Free investment advice and counseling. All you have to do is look.

What’s the solution? Read through your employee handbook and know the benefits available to you. Pay attention to emails and memos from human resources, as they often let you know about benefits. If you’re not sure about something, ask for help. And don’t hesitate to sign up for stuff – it’s there for you.

Major purchases are financed by debt, not by advance saving, and are often bought impulsively without research.

Not long ago, I watched a friend purchase a car. They needed to replace their old college-era Honda, so they just watched a couple of TV commercials, went to one local dealership less than a week later, and came home with a vehicle (and a hefty debt as well). He’d known that he needed a car for a while, but there was no advance planning – when he decided to do it, he just went and did it.

The end result? A poor impulsive car choice that doesn’t excel in reliability or gas mileage and a huge amount of debt. All it would take is a tiny bit of advance planning and an hour or two at the library and you’ll get a reliable car with good gas mileage, the car you actually want, and you’ll have a nice down payment in hand – and thus a better loan, too.

What’s the solution? If you know you’re going to be buying a car in the near future (three years or less), start making payments now by putting that money each month into a savings account. Then, as the time gets closer, figure out what you actually need and research those cars at the library or online. Find a model that fits your needs and wants the best and is reliable and has good gas mileage, then know what the car should cost – you can do this with an hour or two at the library. Then walk in there, buy the car with a large down payment or outright cash, and you’ve suddenly got a great car for a very nice price. You can apply the same exact logic to other purchases – appliances and home purchases reward advance saving and research.

Investments (particularly retirement) aren’t diversified.

A final concern that I often hear is that people are utterly panicked by the downturn in the stock market and are watching their retirement savings lose 20-25% of their value over the last year. This is especially true for people who are reaching retirement age – losing 25% of your retirement in the years just before retirement means that you’re simply going to be working for a while longer.

For younger folks like myself, it’s not quite as worrisome. My Roth IRA won’t be available for withdrawals for thirty years, after all. But even for me, it’s important to not have every egg in one basket – I invest in broad-based index funds that essentially have a few pennies in thousands of different stocks at once, so that the failure of one company won’t cause me to drown.

What’s the solution? Diversify, especially as you get closer to retirement. If you don’t know what you’re doing, put your money in a “target retirement” option that’s close to your retirement date so that they can auto-diversify for you. Do not hold more than 20% of your retirement savings in a single stock – I’d be nervous holding more than 10%.