Learning what exactly you're supposed to be doing with your money is hard. While spending your entire Friday paycheque on a new pair of shoes might sound like a good idea in the moment, there are better ways to handle your cash.
Narcity spoke with Angela Iermieri, a financial planner and spokesperson for Desjardins, who revealed what rookie money mistakes you are making that you should stop doing ASAP.
Not having a budget
When it comes to handling your cash, Iermieri told Narcity that the biggest mistake you could ever make is not coming up with a budget.
"In general, I would say that one of the biggest mistakes is not having a budget, or at least not following their budget, or not knowing where their money goes," she told Narcity.
"That means that they don't review their expenses as often as they should to see what they pay or maybe they just shop without a list."
Iermieri states that those without a budget will often find themselves in debt, so if you haven't already, you might want to start looking at your finances. Even creating a list or small budget on your next shopping trip is a great place to start.
Not saving your money early enough
Another mistake that people make with their money is not actually saving it, Iermieri reveals.
When getting your paycheque, a chunk of that money should always be put away.
"The rule is to pay yourself first. When you get your paycheque, you should have an amount that is directly taken away and put in a savings account."
"A lot of people don't have the reflex or say that they are too young to start a savings account," she stated. However, it is never too early to start saving.
A good first step is to look at your budget and find what amount you can live without.
"You budget according to your paycheque and you say 'well I have so much money coming in, I have so many expenses that I have no choice, I have to pay my rent, or I have to pay my tuition or whatever fees you have to pay, those are mandatory."
"Then there are the discretionary expenses, what you want to spend on like living expenses and fun expenses. And then how much can you save per pay or per month? And that's the first step to do."
The best way to kickstart your savings is to do it in automatic installments into a separate account, so you don't have to think twice about putting that money away.
Not having an emergency fund
Once you starting saving, you want to make sure that some of that money goes towards an emergency fund.
In fact, Iermieri states the best way to be prepared for when something unexpected happens is to have some cash set aside.
"Another mistake that people do is not having an emergency fund. Often, when you tend to live paycheque to paycheque, or just not saving money, your first priority should be saving for an emergency fund in case something happens."
"What happens if I lose my job? Or my car breaks down? Where do I get the money to tend to those needs." These are all problems that this backup fund can help you with.
Impulse buying with money you don't have
Another mistake that Iermieri often sees people make, is using their credit cards to impulse buy products with money that they don't have.
"We often see that for impulse buying. 'I'll just put it on my card for now, I'll get it, why wait until I have the money saved up for it?'"
Iermieri states that this is how you can lose control on your budget and accumulate more debt that needs to be paid off. Instead, you should be saving for bigger items that you want to buy.
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