Have you ever bought something crazy and regretted it, like the perfect outfit for an Ugly Sweater Party? When you're just starting out, it's easy to make mistakes with your finances. Here are five money mistakes to avoid at all costs.
Forget the infamous avocado toast. How many of us have gotten Instagram-envy when we see our friends' vacation photos? I know I've been guilty of that! Did you know that the average Facebook user will have at least two friends on vacation at any given time? That's hard to keep up with!
I find keeping both a budget and a gratitude journal help with overspending. Why a gratitude journal? It's easy to forget about the things we do have in life and focus on what we don't have – yet. But when you make sure you can afford your purchases, you'll be much happier in the long run.
2. Not getting life insurance.
You'll likely never be healthier than you are in your twenties or thirties. This is the perfect time to make sure your family – or future family – is protected in the event of the unimaginable by locking in a lower rate.
3. Paying too many fees.
Banks tend to charge more fees than credit unions, since credit unions are member-owned and not-for-profit. Look for a credit union that offers a free checking account and free financial counseling if you need it. Maybe even look for a sign-up bonus, because who doesn't love free money? Establishing a relationship with one now means you'll already be familiar with them when the time comes to buy a home or invest.
4. Not negotiating.
Whether you're accepting a new job or buying a new car or home, millennials are less likely than any other age group to know how to negotiate to maximize their finances. According to a recent study, only 37 percent of millennials have ever asked for a raise. When buying a car, millennials are far more likely to focus on monthly cost than total cost, according to Automotive News, perhaps because we're all so used to monthly subscriptions like Netflix. But offers and counteroffers are expected in all these situations. So we need to stop leaving money on the table.
5. Not tracking finances.
You need to look at both the day-to-day spending and the big picture. See if your financial institution has an app so you can manage your money from your phone. Then check your balance frequently. There's great budgeting software available for free, so you can see how you're doing without a ton of effort.
Then, once or twice a year, sit down and look at the big picture. My husband and I add up our net worth every year. The main categories we look at are debt, real estate value, retirement accounts and our cash assets – our checking and savings accounts. By adding up our assets and subtracting out any debt, including mortgages, we have a realistic picture of where we are.
If you find out you have a negative net worth, that's okay! The most important thing is to know where you are and make sure you're growing. Continue to pay your bills on time, pay off debt and build a savings account, and you'll get where you want to go.