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Losing money is a part of life, but many people make it much harder on themselves than necessary. Whether it’s an overly risky investment or an unfortunate accident, financial setbacks can be difficult to recover from and may even affect future goals and aspirations. While there are many ways to lose money, the good news is that it’s also possible to recoup some or all of the losses by making wiser choices in the future.

1. Getting scam can drain your wallet faster than a speeding or parking ticket. While it’s impossible to completely avoid these penalties, you can reduce the likelihood of losing money by obeying posted traffic laws and parking signs.

2. Overspending

One of the biggest ways people lose money is by spending more than they can afford. This can lead to debt, strained relationships and a variety of other problems. To prevent this from happening, spend only what you can afford to pay for with cash or a debit card and stick to your budget.

3. Investing poorly

Many people lose money by investing badly. The best way to avoid this is to find a trusted investment advisor and research any investments you’re considering carefully before making a commitment. It’s also helpful to diversify your portfolio, so that if you lose money in one area, it will be offset by gains in another.

4. Failing to plan

Planning and saving for retirement, a child’s college education or the purchase of a home are just a few examples of important money-related goals that can fall by the wayside if you don’t have a strategy in place. To prevent this, develop a savings plan and review your financial situation regularly.

5. Taking too big of a risk

In the world of investing, there are few things worse than taking too much of a risk with your hard-earned money. Trying to beat the market by taking bigger risks than are appropriate for your current financial situation is an easy way to lose money.

6. Buying into the hype

If you’re constantly hearing about a hot stock or mutual fund, it’s a good idea to take some time to evaluate the facts before jumping on the bandwagon. It’s also worth comparing the investment with similar funds to see if you can get the same return for less.

Behavioral economists have identified a phenomenon known as “loss aversion,” in which the pain of a loss is perceived to be more severe than the joy of a gain. This can lead to irrational behavior in investors, so it’s essential to understand the psychology of risk-taking.