No one is an exception in making a mistake, we all make one after all. Yet, when it comes to money mistakes, there’s always a backfiring cost you have to pay. While some recover from them, others have had to face lasting and unfortunate consequences.
As we bid farewell to 2021, we’d like to share some proper hindsight that can assist you in becoming a little wiser in handling your finances this 2022. This is a new year to be a little wiser, giving your future self, something to thank you for.
You are the driver of your financial journey, and you have to operate your wheels in the right and secure direction. It’s all in your hands to avoid these money mistakes you should avoid this year.
1. Not negotiating your salary
Not negotiating your salary in the hiring process is one of the money mistakes commonly made by job hunters, primarily because many are afraid to come out really aggressive.
Are you aware that your current salary can have a significant effect on your next job? One of the questions during a job application has something to do with salary history since this is one of the aspects employer’s basis in giving you a salary offer. Making negotiations before accepting a job is necessary for increasing the amount you can earn in your next job and in the future.
Having the guts to negotiate your salary is a way of showing your employer that you are confident with what you have to deliver.
2. Not having a transparent inventory of your spending
As the popular sayings go, “You cannot manage what you don’t measure.”
If you don’t estimate the amount that comes in and out, you will not have any idea if you are underpaying, overspending, or if you’re just right on track. You have to work with budgets since it’s definitely one of the best ingredients to success. Began creating a budget, and you’ll see the magic it can do in your finances.
3. Not making money in your free time
Since having a job is pretty hectic, many employers just want to have time for themselves to sleep or do things away to ease up their minds like clubbing and playing video games. What many people nowadays fail to see is that they are wasting their precious time doing these things. The time that could’ve been allotted to make extra dollars.
Being successful means knowing how to sacrifice for the things that don’t bring you anything good in return. Rather than squandering your money by enjoying yourself out with your socialite friends, take your time to take up a hobby in your free time, and look for ways on how you can make some money out of it.
4. Spending excessively
Many abide by living YOLO (You Only Live Once). However, splurging your hard-earned money, for this reason, is a very unwise thing to do. Using mortality as an excuse to undertake a reckless money decision will keep you in a dim cycle of financial stress.
The YOLO spending mentality has great long-term financial consequences in return for short-term, on a whim, financial decisions.
You need to understand that money has four jobs:
- To be invested
- To be saved
- To be spent
- To be donated
Spending your money on only one of these avenues indicates a lack of strong financial literacy, which could, later on, put you into chaos.
5. Panic-selling investments
Panic selling is a pretty common gut reaction when investments, particularly in stocks or cryptocurrencies, plunge. This phenomenon is often seen during market dips where investors pull out their investments, afraid of losing them all.
During the economic decline in 2020 when the global pandemic come out, great investment losses have led to numerous waves of panic selling shares, frightened that stock prices might drop further.
Here’s a tip: Don’t immediately sell your stocks during a market decline. The scariest, yet best approach when it comes to stock investing is buying and holding, no matter what happens in the market.
You need to fight off the urge to panic sell whenever there are some short-changes in your investments. This strategy could benefit you greatly in the long run.
6. Not having an emergency fund
You’ve heard this here and there, but it might just be a sign for you to start having one, or to strengthen you’re already established an emergency fund.
As you must have already known, emergency funds cater to time-sensitive, abrupt expenses that might cost you all your money. If you get sick, can your insurance policy cover all your medications? Or if there’s a sudden repair in your home or vehicle, would you be willing to spend your month’s hard-earned money all at once?
If you’re not comfortable in saving big amounts for your emergency fund, begin saving as little as you can to not be overwhelmed. You could save as small as $1 every year. After a year, you’ll have $365 savings for emergencies. Even a small amount like this can help you have a lesser burden in case financial trouble creep in.
7. Purchasing things on credit
Credit cards are known to make life easier, and a bit harder at the same time. While the convenience it brings is superb, many people fall into the trap of debt by regularly using cards on making purchases.
Buying groceries and paying for gas on credit isn’t a good idea since you’re buying these items with interest. To put it simply, when you buy something on credit, you basically pay a higher price for the items. Using credit cards to buy things can also make you lose track of your expenses since there’s no tangible money to let you see how much you’ve spent.
Not all credits are bad, but not all are good either. Either way, you need to monitor both to have a clear understanding of which could sink your finances later on in life. If you are already in debt because of your credits, you need to identify which expenses add salt to your wounds. To improve your credit score, pay off credits on time.
8. Not having a credit monitoring setup
With hackers on loose in the world wide web, fraudulent activities are also on a surge. Without setting up credit monitoring and theft identity services, you could suffer great losses.
Credit monitors would keep your information safe and keep track of your information on the dark web on the chances someone tries to hack you.
9. Lending money to your friends
Lending money is a money mistake common to people in their 20s. Individuals in their young adulthood have this idea of wanting to be liked by their friends, so they easily open their hands to lend money.
However, if you are barely making ends meet for yourself, lending money shouldn’t be one of your options, or else you could end up having a bad relationship with the person with whom you lend your money. Save yourself with the possible heartache and hold tight into your purse until you are stable enough to bid a farewell to your hard-earned money without crying.
10. Having unrealistic goals
Most of us dreamt of being princes and princesses back when we were young. Getting a little older, we realized that we can’t get too caught up with these fantasies, and we have no choice but to work really hard to make profits.
If you want to go and get that red BMW you’ve been eyeing on for years, you need to set realistic goals to achieve them. You should stop daydreaming but find ways to turn your vision into reality.
