The 6 Worst Money Mistakes We Saw in 2020 — And How to Avoid Them This Year
The past year was so utterly strange; so turbulent; so unprecedented. It’s only natural that, faced with such weirdness, a lot of us would make some mistakes with our money.
Hey, it happens. Nobody’s perfect.
When it comes to financial mistakes, we saw some doozies in 2020. People were making wrong turns left and right. So much money went down the drain when it could have been lining our pockets instead.
But it’s a whole new year, and there’s plenty of time to get things right in 2021.
Here are the worst money mistakes we saw in 2020, and how to avoid them this year.
1. Not Having an Emergency Fund: See if You Can Get Free Money From This Company
A lot of us learned the hard way in 2020 that it’s important to have an emergency fund as backup — just in case.
An emergency fund is a stash of easily accessible money that equals three to six months’ worth of salary, in case you unexpectedly lose your job. And millions of us unexpectedly lost our jobs in 2020.
With the Aspiration Spend account, you can earn up to 5% cash back on your debit card purchases. With the Aspiration Save account (where you can funnel your tax refund), you can earn up to 20 times the average interest on your savings balance. (The FDIC reports that the average account earns just .05%.)
It takes five minutes to sign up.
2. Not Investing: This App Gives You Up to $200 in Free Stock
Obviously, 2020 was a bad year for many of us, financially speaking. But some people cleaned up because they invested.
- At the beginning of 2020, a share of Amazon stock cost $1,900. At the end of 2020, it cost $3,250.
- At the beginning of 2020, a share of Tesla stock cost $96. At the end it cost $705.
The best time to start investing was a year ago. The second best time to start investing is right now. Whether you’ve got $5, $100 or $800 to spare, you can start investing with Robinhood.
Yeah, you’ve probably heard of Robinhood. Both investing beginners and pros love it because it doesn’t charge commission fees, and you can buy and sell stocks for free — no limits. Plus, it’s super easy to use.
What’s best? When you download the app and fund your account (it takes no more than a few minutes), Robinhood drops a share of free stock into your account. It’s random, though, so that stock could be worth anywhere from $2.50 to $200 — a nice boost to help you build your investments.
3. Not Having Life Insurance: Leave Your Family up to $1M
There’s been a surge of interest in life insurance during the COVID-19 pandemic, as more Americans are realizing they probably need it. Overall, Americans bought about 10% more life insurance policies in 2020 than they did in 2019 — the largest increase in nearly two decades.
Have you thought about how your family would manage without your income after you’re gone? How will they pay the bills? Send the kids through school?
For many people, social distancing mandates and fear of infection have prevented them from going to a doctor for an in-person exam. That’s leading more people to seek out no-exam life insurance like the kind offered by a company called Bestow.
Your application can take minutes, and rates start at just $16 a month. The peace of mind knowing your family is taken care of is priceless.
If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.
4. Not Keeping Track of Your Credit Score
There are a few ways the pandemic may have lowered your credit score in 2020:
- You were late on any credit card payments.
- You’re using up most or all of your available credit.
- You can’t make your mortgage or student loan payments. If you have a federally backed mortgage or federal student loans, you’ve been able to ask for a delay, but that doesn’t include everyone.
Also, it’s on you to double-check and make sure your paused mortgage and student loan payments are being properly reported on your credit report.
One good way to keep tabs on this is through a free website like Credit Sesame, which will help you monitor your credit. Credit Sesame shows you your credit score, examines your credit reports and keeps you updated on any changes. It also shows you how to raise your score.
5. Overpaying on Monthly Bills: Knock $489/Year From Your Car Insurance in Minutes
With our financial margins so tight in 2020, not enough of us took action to trim our monthly bills. For example, when’s the last time you checked car insurance prices?
You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be.
A website called Insure makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options — and even discounts in your area.
Using Insure, people have saved an average of $489 a year.
Yup. That could be $500 back in your pocket just for taking a few minutes to look at your options.
6. Paying Too Much Credit Card Interest
More and more Americans are financially strapped due to the high unemployment rate, and they’re maxing out their credit cards. The interest rates those cards charge you can quickly rise above 20% and will persistently gobble up so much of your income that you’ll never get ahead.
Truth is, your credit card company doesn’t care. It’s just getting rich by ripping you off with high interest rates. But a website called AmOne wants to help.
If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.
The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.99% APR), you’ll get out of debt that much faster.
AmOne won’t make you stand in line or call your bank, either. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could help you eliminate this red flag in your life — once and for all.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He knows a lot about mistakes because he’s made a lot of them.