Let's talk about money, y'all! If you've been following me on Instagram, you know that I did many things to improve my finances in 2020. For example, I got a job, paid off all my collections accounts, and raised my credit score by over 50 points. All of my money changes didn't come without several mistakes. Today I wanted to share five money mistakes I made in 2020 and how I plan to fix them going forward.
1. Making Small Purchases That Add Up To Big Spends
I am so guilty of letting small purchases add up to big spending. For example, I might buy a book on Amazon, fall prey to random blogging related Instagram ad, or buy a new sweater online. All those purchases I made were small at the moment, but they grew into real problems for my finances over the month and the year.
In 2021, I plan to pay closer attention to those small charges so that I can make proper decisions. I also want to ensure that I am not too quick to add to cart in 2021.
2. Not Creating A Hard, Fast, And Tracked Budget
You may recall a few years ago, I shared my bill tracking spreadsheet. For the last several years, I've been using that to keep track of my bills, make sure everything was paid on time, and ensure I always have money in my bank account to cover any large expenses. Here's the issue with this: my bills never added up to my total income. Most people's bills don't equal all the income they bring in. Since I didn't do a great job of tracking where all the other money was going, I ended up spending at a horrific rate this year.
In 2021, I am planning a full-fledged budget with line items for things like fun and blogging. I want to ensure that all of my money is attributed somewhere, so I don't end up spending all my extra money on myself. It was easy for me to pay bills because things were automatically drafted. I might have to create a similar experience for my savings in 2021.
3. Focusing Too Much On Monthly Spending And Not Larger Trends
I've been using TrueBill to track all my bills over the last year. I recently found out that TrueBill can show you quarterly and yearly spending trends (not just monthly ones.) If you look at things month-to-month, it's harder to notice larger money-spending trends. I was pretty shocked when I looked at my yearly spending, not going to lie.
In 2021, I plan to take a closer look at my spending trends monthly, quarterly, and yearly. I want to know any larger trends in my spending habits before I can't properly course-correct.
4. Letting A Small Number Of Companies Make Up A Large Amount Of My Secondary Income
I love my day job, but I wouldn't be able to live on that salary alone. I need the extra income to pay my bills, take care of my expenses, and build the life I want. Besides my day job, I currently make income from freelancing and blog work. I feel like my side hustle income (especially the income coming from my blog) wasn't very well-distributed. There were a couple of incidences this year where I was stuck waiting on a company to pay me, and it created a lot of close calls in my finances. It didn't help that I took a few months away from freelancing throughout the year when my day job stressed me out. Luckily I had money in other places that I could lean on if things got too tough.
In 2021, I want to take the time to build out my income streams. I love getting money from various sources, and I want to make that even bigger in 2021.
5. Using The Wrong Credit Score To Check In On My Money Progress
One of the biggest things I did this year was start tracking my Experian credit score. For a while, I used other credit scores like Capital One’s Creditwise Vantage 3.0 score. Capital One’s score was usually much higher than my Experian score, and this made everything complicated. Here’s the thing, creditors don’t look at Vantage 3.0 scores. They look at FICO scores. If you are not accessing your FICO score, you’re missing out.
In 2021, I am going to continue to track my credit score regularly using Experian Creditworks. I paid for a year of daily credit report updates earlier this year. That payment will take me through most of next year. I am excited to see the leaps and bounds my credit can take in 2021. I know that I will soon be in the 700 club!
21 Money Moves For 2021
Looking for something you can do in 2021 to bring in more money (or reduce the money you have to pay to others)? Try out one of these 21 money moves for 2021.
- Get a side hustle.
- Get into the stock market with Robinhood.
- Read a personal finance book.
- Follow practical money coaches (my favorite is @millennialfinancialeducator.)
- Listen to a podcast about money.
- Take a personal finance class.
- Start a savings account and build your emergency savings.
- Figure out what you need to do to get a raise at work.
- Look through your spending for 2020 to make better money decisions next year.
- Check-in on the effectiveness of your investments to see if you need to make any adjustments.
- Plan a few no spend weeks/months throughout the year.
- See if paying for any of your bills annually will help you save money.
- Consider what you can do to pay more on the principle of any loans you have.
- Figure out your donations for the year and how you will use that to improve your financial standing.
- Get your real credit score.
- Create a vision board about what you want from your money in 2021.
- Sell old things that are collecting dust in your home.
- Find ways to improve productivity (time is money!)
- Move away from trading time for money (and trade ideas for money instead.)
- Get a part-time job or work overtime at work.
- Negotiate a bill reduction.
Do you want a downloadable copy of these money moves? Click here to get a completely free copy (no email required!) If you want to dive deeper into making extra money, scroll down a bit more to get a free copy of my side hustle planning kit (email required.)
Even if you've made some bad money decisions in 2020, there is hope for you! Take some time to reflect on your money decisions in 2020. How do you plan to fix these in 2021? Take some time to reflect on your mistakes, because once you admit what you did wrong, you can easily take steps to fix mistakes.