If you’ve reached the point where you can say you’ve started making some real money, then congratulations are in order! It’s not an easy journey to make. And there’s a good chance you had to work your rear off to accomplish it.
However, you’re far from the finish line just yet. And to make sure you don’t fumble the bag, it’s a good idea to take stock of where you are, where you need to be, and what you need to do to get there.
What’s more, you should make sure that you’re not making the mistakes that really set you back. Here, we’re going to look at some of the mistakes people start making when they start earning some real money. And what you can do to avoid them.
#1: Don’t Start Living In Sync With Your Means
It’s all too easy to see a nice big number on a paycheck. And to immediately up your lifestyle expenses to keep up with it. It’s nicer to enjoy some of the finer things in life. But there’s the real social pressure to show the world what you’re worth.
This impulse, however, is not really worth the opportunity cost that comes with it. If you’re spending as much money as you earn, then you’re not really any wealthier despite the bump in your pay.
You don’t have to live like a miser. And you can spend money on essentials that you might not have been able to afford as easily, but that doesn’t mean that you should start spending everything extra you earn.
#2: Going On Without the Budget
One of the single best ways to make sure that you’re not just mindlessly spending what you earn is to start paying a lot more attention to what you earn. You should create a budget, or update it if you already have one, and look at how your expenses are changing.
You might be able to curb some of those or you might see that you have a lot more room to grow. If you’re worried about your spending, then you should make use of an expense-tracking app to make sure that you stay on the right path. Either way, you should become a lot more aware of your money and how you manage it.
#3: Not Having An Emergency Fund
One of the most common pieces of financial advice is to make sure that you have an emergency fund at your disposal. This is money that’s set aside for use in an emergency, such as losing your job, having sudden huge costs (such as housing repairs or needing a new car), or the like.
However, what a lot of people don’t tell you about an emergency fund is how unviable it is for the majority of working people. Saving up 3-5 months’ worth of pay simply isn’t possible for a lot of people.
Now that you’re making more money and have more wiggle room in the budget, however, it’s time to really start considering it. Your years may not always be as fat as they are right now. You have to anticipate the lean ones, too.
#4: Continuing to Work For All Of Your Money
You have made it this far, likely by working yourself to the bone and proving yourself to be worth as much as you’re getting paid. However, you have also unlocked the key to additional wealth.
Aside from non-liquid assets that you can invest in, you can start getting your money to work for you through a passive income. This can include things like crypto staking, finding investments with dividends, or looking at the possibility of investing in rental property. You’ve worked hard enough to get here, you don’t have to keep working even harder still to keep building even more wealth.
#5: Making the Same Money Decisions As Ever
You might have gotten to your level of earnings in part due to your financial literacy. However, as you reach the upper brackets of earnings, then the potential benefits you can see from using the right savings products and investment platforms increase exponentially.
It’s probably fair to say that you are not an expert in the financial field. So working with financial advisers can be a great stepping stone to the greater wealth that you’re trying to build.
Tap into the knowledge that can help you make the best use of the money that you’re earning so that you’re not simply wasting it by making the same financial decisions as you always have.
#6: Getting Satisfied With Your Job
As mentioned, it’s not enough to consider a well-paying job the finish line. Aside from the fact that you’re likely to start stagnating if you don’t keep up the momentum.
The truth is that you should capitalize on the additional worth of your skills. A pay bump, alongside a promotion or however else you got it, can serve as the stepping stone to even better.
This doesn’t mean that you have to be a mercenary, looking for a new position immediately. But you should change how you envision the future of your career and re-evaluate where you want to be a decade from now.
#7: Not Dealing With Your Debt
It’s easy to think that, now you have the extra money, debt suddenly becomes a lot less pressing. It’s true that it might be easier to pay off now. But that doesn’t mean you should let it become less of a focus.
Instead, it should make you eager to pay it off all the sooner. The longer you leave debt to grow, the more it will cost you in the long run. What’s more, as mentioned, there is no guarantee that you have no lean years ahead.
Getting rid of debt now can help you get rid of a future cause of real economic concern. Then you get to free money up once the debt is gone so you can better contribute to your other financial aims. What’s more, paying off debt just feels good and can be worth it for the sigh of relief you’ll breathe after.
#8: Make Better Use Of Your Credit
Once you’re done with debt, it doesn’t mean that you should never accrue debt again. One of the most important tips about debt is not that you never get into it. But rather that you’re able to use it in a manageable and reasonable way.
Starting using credit cards responsibly to build up and pay off debt. This can help you build your credit score. It will make it easier to get approved for big-ticket expenses.
Such as cars, homes, and maybe even a business loan if that’s in your future. Use your credit to improve it, and keep improving it in case you ever need to make real use of it.
#9: Forgetting About Your Retirement
Above everything else, you should be thinking about how this bump in your financial circumstances can be better used in the future. A financial planner can help, but one thing you should ensure that you do is rethinking your retirement plans.
If you’re employed, then make sure that you’re catching up on your contributions. And max out your employer’s match, if they provide one. Otherwise, you can look into other retirement products to make better use of any extra money that you want to start putting into it.
Like high-interest savings accounts, or even set yourself up with an annuity package. So you can continue making an income well into your retirement future.
#10: Not Taking Care Of Your Health
It might sound like it’s entirely unrelated to your wealth, but that’s not true. If you want to continue making good money, then you also need to make sure that you have the energy and willpower to do it.
You’re not going to build these if your healthy living standards start to slip. What’s more, bad health can directly impact your future earnings potential.
Expensive treatments can eat up your earnings. Or you may eventually develop health issues that make it impossible for you to be as driven. You might have the means to start living comfortably on takeaway seven days a week but that doesn’t mean you should.
#11: Acting Better Than Your Peers
It’s unfortunate, but some people start to treat their peers as though they are lesser than them. Just because they don’t make as much money. Aside from making it impossible to manage healthy relationships that aren’t based on money, this will breed endless resentment. Check yourself and your ego occasionally, remembering that it’s part luck you got where you are.
That said, you should enjoy the fruits of earning more. A better lifestyle (when managed well) and less financial insecurity are well worth the work it took to get there.