When it comes to personal finance, there are a lot of tricks that people use to save money and make more. Some of them are helpful, while others can be damaging in the long run. In this article, we’ll explore some common financial tricks you shouldn’t fall for:
Paying the minimum amount due on your credit cards
Paying only the minimum amount due on your credit cards can hurt you financially in the long run. Paying more than the minimum is better because doing so will help you save money and maintain a good credit score. If you consistently pay more than the minimum, it indicates that you’re responsible. Therefore, you’ll be paying off debt and making payments on time. Consequently, lenders will be more likely to lend to you at a lower interest rate, which helps keep your spending costs down over time.
Using the ATM of a bank that’s not your own
Using the ATM of a bank that’s not your own can be a costly mistake. Most banks charge fees for using ATMs outside of their network, which are usually high. You can avoid these charges by using one of your bank’s ATMs—they’ll typically have lower rates than those at other branches.
If you’re still tempted to use an outside machine for convenience, know that there are ways around the fee: first, many grocery stores and pharmacies offer free checking-account access through their own machines; second, some banks will waive any charges if you’re a new customer with them (though this isn’t guaranteed).
Missing out on matching funds from your employer
If your company offers matching funds for your 401(k) or other retirement accounts, make sure you take advantage of the program. If you don’t, you could be leaving thousands of dollars on the table.
Employers will often increase an employee’s contribution up to a certain percentage, usually around 3% or 4%, and then match another 1-2% based on how much an employee contributes.Â
Not negotiating your salary
You can’t negotiate your salary if you don’t ask for it. You need to make sure that your boss is aware of how much value you bring to the company so they will pay you accordingly.
If negotiations don’t go as planned and your boss doesn’t give in right away, then it’s time for counteroffers. A counteroffer is when an employer offers another position within the company (at a different salary) or some other incentive like stock options or bonuses if you accept their initial offer instead of asking for more money from them outright.
Not having an emergency fund
An emergency fund is the best way to ensure that your day-to-day life isn’t disrupted by a sudden financial crisis.
Ideally, it’s best to have enough money to cover three to six months’ worth of expenses if something unexpected happens—like being unexpectedly laid off or having your car break down for good.Â
The easiest way to build up an emergency fund is through the power of automatic savings. Depositing some portion of each paycheck into an account earmarked solely for emergencies will help ensure that those funds are always available when needed without having to worry about how much they’ll cost out-of-pocket later on down the road!
Not using cashback rewards from a credit card
You’re probably familiar with the concept of cashback rewards. You use a credit card, and when you pay for purchases, you get some of the money back in the form of points or miles. It’s a great way to save money!
But there are some things you should be careful about regarding cashback rewards. First, you shouldn’t use these funds to pay off your credit card balance since doing so doesn’t help you build any savings—you just avoid paying interest until the next statement closes. Instead, try putting that extra cash toward paying down other debts (like student loans), building up an emergency fund, or even investing your money in stocks and bonds instead (but only do this if you understand how investments work).
