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Thursday, 11 March 2021 22:35

Top 3 Money Mistakes Made in 2020

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money mistakesLet's learn from last year -- and not make the same mistakes again.

2020 caught a lot of us off guard. I mean, I'd have laughed if you'd told me last January that my kids' last day of in-school learning would take place in March and wouldn’t start back up again until the next year. Or that we'd spend the better part of the year rationing toilet paper and barely leaving the state. But alas, 2020 affected all of us, and in the course of that rigorous year, some unwise financial decisions were made. Rather than wallow in them, lets learn from these mistakes. Here are some mistakes to not make this year.

  1. Paying a premium for grocery delivery

When the coronavirus pandemic first hit, shopping for groceries in person was a scary thought. Back then, New York City was the outbreak epicenter. Nearby New Jersey was too close for comfort, with thousands of cases being reported in my state every day.

As we all grappled with ways to maintain a normal life without going out, I chose to order a lot of my food from a specialty store. Rather than price out different grocery delivery options, I paid extra for the convenience of not having to haggle for a time slot. All told, however, my grocery bills in March and April easily increased by 50% simply because I chose that more expensive store, and the faster delivery option.

However, I'm no longer shopping at that specialty store, which saves me a bundle loads of money. It does mean I have to plan out my shopping ahead of time. The specialty store could often accommodate same-day requests, whereas you need to place an order for delivery or pickup multiple days in advance with the regular supermarkets. But it's a good way to keep myself organized and save me money.

2. Overpaying for essentials when I wasn't running out

Remember the great toilet paper crunch of 2020? I took part in it needlessly. In fact, I bought a lot of essentials in March and April, like paper towels and hand soap, even though I had enough to keep going for many more weeks. Of course, stocking up on things that don't go bad isn't necessarily a terrible thing. But in several cases, I paid extra money for those supplies. Now, I'm stocking up more strategically -- namely, by looking at sales and buying those products when the price is right, and not when stores are price gouging items and sending there prices skyrocketing.

3. Putting too much cash into my emergency fund

As a self-employed writer with a variable income, I'm always nervous my earnings might drop when I least expect them to. That's why I make a point to have a healthy emergency fund -- enough money to cover more than six months of living expenses. When the pandemic hit, however, and reports started coming in about widespread unemployment, I panicked. For the next while, I put most of my money into my emergency fund, instead of putting it into my savings account.

That's something I continue to beat myself up over. The reality is I already had plenty of cash on hand to deal with a loss of income. But by diverting too much extra money to savings, I missed out on some investing opportunities when stock values dropped earlier on in the year.

At this point, there's really no need to add more cash to my emergency fund. Instead, I intend to funnel more cash into my brokerage account this year, especially since savings accounts are paying so little interest.

We all make mistakes, and while these were not the worst, there still a reminder to be smart with money

 

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