Financial decision-making is a skill you get better at over time. So don’t be surprised if you make some of your biggest money mistakes in your teens and twenties. Being good at managing your money is truly an art that anyone can Master. Your saving habits will hopefully turn into a nice touch of savings in your bank account but to get there, you need to know what the most common money mistakes are and how to avoid them so that you don’t end up falling at the first hurdle. Here are the most common money mistakes to avoid and how to fix them.

Not having a monthly budget

Not keeping to a budget is a very common money mistake. It’s often a little luxury that we don’t notice that burn holes in our pockets. These could be an expensive gym membership, spending lots on nights at the bar, or necessary cab rides. These purchases can be okay once in a while but when they start to become a habit and don’t fit into your monthly budget that’s the time when there is an issue. Knowing when and how to stop spending money can be tricky at first but following a monthly budget will help you keep track of your spending and find out which habits you need to get rid of.

Not earning money in your free time

Finding a way of making money in your free time is super important and not just for your bank account. Having a bit of extra income as a way of propelling yourself towards your long-term financial goals, is also a way to ensure that when you do treat yourself, you have the extra cash to do so and don’t make the mistake of thinking that making money on the side is only good for your bank account.

Having a side hustle is a great way to enhance your career prospects and is a sure thing to impress a potential employer. It could be anything like setting up your own business, selling photos online, or other passive income ideas. Every little thing counts.

Not having an emergency fund

An emergency fund is an absolute must. If you don’t have one, you may find yourself resorting to short-term solutions. You’ll regret it in a few years’ time. Ideally, this fund should be enough to tide you over if your student loan is late or if your phone suddenly breaks and you need to buy a replacement. Having some money set aside for a rainy day can also be really useful if, you find yourself unemployed and without an income for a few months.

There are loads of ways to make money to help you through a rough patch. Topping up your savings account a little bit each month, even with just a few quarts, or putting a penny away in a jar each day is a great way to get started without leaving you with little or no money to spend for the rest of the month.

Having unrealistic financial goals

It’s hard to know exactly where you’ll be in 10 years’ time but it is worth considering what some of your long-term goals are. Do you want to buy a house? Do you want to set up a business? Do you want to travel the world? These are all new ideas but they all have one thing in common. They require financial planning. Setting some financial goals for yourself to work can be great motivation for kickstarting your career. Sit down and write down a list of things you want to accomplish. Work out a realistic timeline of when you’d like these things to happen and how much you would need to save each week or month together. Keep the money for these goals separate from your emergency fund if you can.

Running up a credit card bill that you can’t pay off

Using your credit card as free money rather than only spending what you have is a one-way ticket to your financial ruin. Treat your credit card, if you’ve got one, the same way you use your debit card, thinking of getting that new iPhone instead of putting it straight on your credit card under the assumption that you’ll be able to pay for it later only put it on if you’re sure you’ve got enough money in your student bank account to pay for it right now.

The same can be set for overspending on buy now pay later services. Only buy what you can actually afford. Being able to pay off your credit card or any other credit every month is vital. Any missed payments will be recorded on your credit card score and could make it difficult in the future to do things like get a mortgage or apply for a loan later on.

Using your credit card to withdraw money from an ATM

Never use your credit card to withdraw money from an ATM. If you do it once, it is recorded on your credit score and can look like irresponsible spending. If further down the line, you apply for a mortgage, a bank sees that you’ve been using your credit card to withdraw cash, they might be concerned about your money management. It could look like you’re depending on your credit card to pay for basic living essentials. As much it may lead them to think you’re not financially stable enough to take on a loan.

Not negotiating a salary when starting a job

Another common money mistake is not negotiating your salary before starting a new job. Negotiating your salary is essential for two reasons, firstly you want to make sure you have enough money to cover the basics like food and rent from that job, and secondly negotiating your salary sets the tone of your relationship with your employer. If you go in with a really low figure, you’re undervaluing your work and encouraging your employer to do the same.

Always expect an employer to turn down your first bet. This isn’t always the case but doing this is a precaution to prepare you for the worst. Go in with a number that is higher than what you’d expect, so you have room to negotiate down and arrive at the actual figure you would accept. So, for example, if you’re aiming at 22,000 pounds, you could go in at 25,000 pounds. Also, anytime you do get a pay raise put the difference between your old salary and your new salary away safely. You’re used to living on your old salary, so the extra money you’ve recently been granted on top can be saved for now.

Lending money to friends when you can’t afford it

One of the common financial pitfalls to absolutely avoid is to have a heart of gold. It’s also one of the most common money mistakes you’ll make in your 20s but you live and you learn as time passes and you get the experience of life. Lending money to friends, especially when you’re already having to live modestly is a straight no-go. It often leads to that awkward conversation where you have to ask for your money back. If you’re struggling to make ends meet in the first place, keep your purse strength to yourself.

 Forgetting to cancel subscriptions you don’t use

When you sit down to review your budget arms with your new personal finance skills, check if you’re still paying for any subscription services for streaming sites for example that you’re no longer using. Free trials are a great way to save money but we’ve all been guilty of forgetting to unsubscribe to service before the trial ends. Amazon can be good when it comes to refunding and using Amazon Prime memberships, you may have forgotten to unsubscribe that. You’ll have to contact them within a month of the first payments being withdrawn from your account and not have used it to purchase anything.

Not going for insurance

If coronavirus has taught us anything, it’s this always take out insurance on holidays, always. In fact, taking out insurance on all big purchases is a no-brainer whether it’s Mobile phone insurance, a holiday, your car, or students’ contents insurance. How many times have you almost dropped your iPhone screen onto a rock-hard floor and dreaded picking it up to assess the damage? Paying just a little bit every month could save you from being financially Shipwrecked in the future. Some insurance purchasers come with serious perks too, like one year or two for one cinema ticket for just one dollar.

Staying loyal to expensive Banks and energy providers

Staying loyal to Banks and energy providers should be a thing of the past. Never assume that just because you’re a long-time customer, you’ll be getting the best deal on offer. More often than not, the exact opposite will be the case. Banks and other utility providers know that people assume that switching means hassle, so they rely on human laziness to keep your business and your money by not offering you a better deal once you’ve settled. But most of the switching process is automated now especially when it comes to switching bank accounts.

Some bank accounts offer great cash rewards and interest rates on savings for new customers. It’s definitely worth shopping around if you think you could get a better deal.