Unless you won the Lotto 649 when you were 18 and have been living off of it since chances are, you work ridiculously hard for the money you earn. Perhaps you work a stressful 9 to 5, maybe you work three separate jobs and still barely have enough to pay rent, maybe you went through eight years of schooling to get your dream job... whatever the situation, you hustle. And I'm pretty sure most people understand the struggle.
But as much as you hustle, sometimes it feels like you never have enough money. Why? Because there are actually so many ways in which we are cheating ourselves out of money that could and should be ours. Whether they're things we don't do, forget to do, or do too much of, here are six ways we're losing money without us even realizing.
1. Paying sneaky bank fees
One thing that people often don't realize is that most bank institutions will charge you a fee just for the privilege of storing your money with them. Everything from using cheques, over-drafting to transferring money, can require a fee. Sometimes you can end up over-drafting several times a day without even realizing it, which can end up costing you hundreds of dollars.
The point is, be really aware of the small (or large) fees on your bank statements. And remember, you can almost always negotiate these fees. Call or visit your bank institution if you are unsure of certain fees that you have been charged, and talk about negotiating or even getting them waived if possible.
Your goal is to not have to pay money just to store money. There is always a better way to bank.
2. Not thinking about "opportunity cost"
"Opportunity cost" is an economics term - it is defined as "the loss of potential gain from other alternatives when one alternative is chosen." Often times, a decision that looks cheaper on paper can actually mean giving up something very valuable that you could have had.
For example, if you "save" money by not investing in a particular skill, like paying for education, software, or online courses, you may be effectively losing money by foregoing the employment opportunities that could have opened up with that new skill.
Another example is staying at a lower paying job when it becomes clear that you're not going to get a promotion that leads you to get what you're actually worth on the market. It can be the more comfortable and low-risk choice, but you're giving up the opportunity to make more money and learn new skills.
If you feel you are being underpaid, look online at websites like Glassdoor or Salary.com to see what the appropriate amount it is that you should be earning. If you've been uncertain on whether to further your education or not, do your research online to see what the potential gain in earnings could be from attaining those skills.
The key: Think long-term gain rather than short-term cost.
3. Being afraid to invest
There is something called an "Investment Horizon" which is "the amount of time your money has to grow and accrue all that compound interest in the meantime". The two main reasons why young people don't invest is because 1) they don't feel like they have enough money to invest, and 2) they simply just put it off. But every day that you don't invest, even if it's just a few dollars, is costing you enormously in how much time your money has to grow.
Sometimes we may feel that investing can be risky, but putting your money in a simple savings account is pretty much a surefire way to not make any money off of what you have, when you could be. Call or visit your bank institution to see what savings and investment plans are best for you so that you can make money, even when you're sleeping.
4. Not using the right credit card for your life
Having a credit card is a lot more than just building credit and having access to funds earlier in the month. Everything from points, to miles, to cashback makes the right credit card for you so important because you'd be paying for those things completely out of your own pocket otherwise.
For example, if you're someone who flies a lot, you should consider getting a credit card that is able to get you miles. You may want to use that credit card specifically for all your monthly bills so that you rack up the miles. While some miles credit cards are not the best and you should be choosing wisely which ones you sign up for, they can actually save you thousands of dollars in airplane tickets. There are some credit cards that are even great for racking up points for groceries... which is obviously something you'll need.
Wherever you are with your credit, remember that the healthiest way to see credit cards is as a convenient way to live the life you already want to live, in a more cost-efficient and effective way. It's not just about building your credit score, it's also about using them to your advantage to save money.
5. Letting things run continuously
Everything from running water to keeping the heating up all costs money. You probably remember your mom yelling at you to just wear socks if you're cold, well, she was right. Every time you leave the water running while brushing your teeth or keep the thermostat set super high even when you're not in your house, is wasting you tons of money, easily hundreds of dollars a year.
An easy way to get over these bad habits is to set a monthly goal for yourself to only use exactly what you need. For one month, make a conscious effort to be economical in the house -- that means, no lights on in rooms you're not in, not running water when you don't need to, and trying to keep your AC and heating at a rather mild temperature. Literally, just wear more clothes in the house during the winter and be okay with being a little warm in the summer.
6. Not asking for a raise
Every time you don't negotiate, ask for a raise, or raise your rates on any contracted work, you are actively cheating yourself out of money. Negotiating is not only acceptable, it's what's expected out of any professional in a work environment. It actually looks weirder if you don't negotiate.
It's not just the low opening salary or rate that hurts you when you don't push back, it can also be very damaging to get into a pattern of low-balling yourself because it also affects what you can ask for at your next job, or position.
Think about how much money you are losing, rather than thinking about it as some abstract extra money that you're getting on top of your salary. You're costing yourself by keeping quiet.