People who live independently tend to make a lot of financial mistakes, especially in the beginning, and it’s understandable.
Because they never had hands-on experience with taking care of themselves in terms of their finances.
According to the Office for National Statistics, around 8.2 million people in the USA live alone. Living independently is a significant life-changing event for every individual. Handling everything from head to toe without someone’s help is tough.
But as people get occupied with themselves by living along. They get used to their daily routine, from doing their exercises to carrying out personal chores.
In the mess of all this, it easy for solos to make multiple financial mistakes and never really notice it and especially in the beginning.
In this article, I wanna address four financial mistakes you might be making being solo and haven’t noticed yet.
1.) Paying too much rent
I can’t write a number here because prices for rent differ from place to place. Apart from the Geolocation, rent depends upon the individual preference to whether they live in a lavish apartment in a happening area (or) live in an apartment which just satisfies his/her needs.
Everyone has their own spending limits and need to appreciate what they can get within their budget.
It is found out that Millennials are spending way more money on rents, and spending way too much on rent is going to make a hole in your pockets.
Because rent is something which we pay every month with a fixed amount of money dedicated to it.
In a case where your salary is on the lower end, and your rent takes a good chunk of your salary. Your rent money is going to crush your saving plans and the financial goals you have for your future.
According to Housing.com, around 30%-40% of your salary should be spent on rent.
But if your rent takes up 60% of your salary, someday you’d be looking at your rent as a burden on your head.
A practical suggestion to lower down your rent will be to move into the rental homes which are away from urban areas (or) else try to work on your salary hike.
2.) Going for those last-minute trips
I know being solo and having way more free time at the weekends, only pushes us to take those last-minute trips and go on an unplanned trip with our friends.
Trips are the best way to chill, relax, and take out the stress from our bodies. But not every unplanned trip is pocket-friendly.
Because here I wanna point out the two important expenses that majorly contribute to any trip:-
- Stay (Hotel/Room)
If you own a bike (or) a car, then it’s okay. You can easily manage those last-minute trips as long as you have access to your bike/car keys, and there won’t be any difference in your transportation cost when compared to a trip that was already planned.
But if you’re transportation is dependent on booking a flight ticket (or) booking a bus (or) booking a car in advance.
Then you have to deal with those late booking prices, no matter which mode of transportation you’re going to use.
According to Investopedia, booking flights at the last moment will cost you 50% more than booking flight tickets 1–2 weeks in advance.
Assume, how 1–2 unplanned trips can easily cost you 100–200$ extra on transportation.
Stay — booking hotels and rooms
The Internet had made it easier for people to book their hotel rooms and Airbnb’s at the last moment and never be worried about their stay. But unfortunately, booking a room at the last moment is gonna cost you extra money compared to booking it days in advance.
People are already aware that, last-minute bookings are always expensive and even with those modern Airbnb rooms.
In such unplanned/last-minute trips, you book a hotel room paying 2–3x of the price. Whereas you could have booked the same room a lot cheaper if had booked in advance.
3.) Online shopping and offers
In this day and age, it’s said to believe that around 63% of the shopping beings online and online orders had made shopping significantly more comfortable and effortless.
Instead of driving to a store and spending time buying. People and especially solos prefer to order it online and wait for the items to arrive.
Buying essentials online might even save you money via discounts and offers you get. But the actual problem doesn’t show up while you’re still buying what you need. It shows up when you order stuff online which you want but actually doesn’t need it.
Online stores and their applications don’t want you to buy once in a month (or) twice in a month from them. They want you to keep ordering from them frequently.
To make you buy their products, they introduce new offers, new discounts, and will be sending you daily notifications related to anything from their app.
All the actions taken by these online stores are meant to entice you to keep on buying from them.
To avoid falling prey to this frequent online buying and offer hunting. You need to prepare a list of items that you need and want for your day-to-day life. Choose to purchase items only if it’s on the list.
Check this article where I have mentioned the online money-saving hack.
4.) Late fees on everything
Everybody hates to pay those late fees and get fined with additional charges. Paying five bucks extra may not look like a lot, but it’s going to hurt you financially somehow.
According to CNBC, the late payment charge on the credit card is up-to 40$. One payment of 40$ isn’t hurting anyone’s account. Let it happen multiple times a year is undoubtedly be like stealing a plate of meal from your own table.
Paying late fees is not restricted to credit cards. They are applied on traffic tickets, taxes, and much more stuff which are assigned to be paid within a precise due date.
All this little chunk of money will look way more significant when you don’t have enough money left in your bank account, and you have a whole month ahead to survive.
Being solo, I have experienced this a lot, and I had usually paid late fees on essentials services, and no, it’s doesn’t look cool when you’re paying those late fees from your savings (or) from your leftover money.
Living independently will make you learn a lot of new things on your own and sometimes will let you make mistakes on your own. But it’s not about the money all the time, it’s also about the habit that we develop for the things in our lives.
Consistently paying late fees tells you that, you’re being ignorant towards your responsibilities and you are keeping your commitments aside.
Avoiding these mistakes will not make you a millionaire. But it will surely help you with tracking your finances and helps you in making better decisions which support you financially to lead a better life.