5 Ways You’re Leaving Money on the Table (and what to do instead)
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5 Ways you’re leaving money on the table (and what to do instead)!!!
Most of us have heard the expression “leaving money on the table.” It’s often used in business and refers to not taking full advantage of a negotiation. However, the phrase can also apply to personal finance.
It doesn’t matter how good you are with money, there’s always room for improvement. And chances are, you’re leaving money on the table without even realizing it.
1. Not investing your money
What I’m about to say might be new information, but it is possible to have too much in your savings account.
Emergency funds are extremely useful during a job loss or when you’re unable to work for other reasons—and most experts recommend having anywhere between 3 and 12 months of living expenses in reserves.
But while a sizable fund provides peace of mind, there’s an important fact that some people overlook. If you’re trying to grow your personal wealth or achieve financial independence, for the average person a savings account alone isn’t going to cut it.
It’s part of the equation, but you have to do more.
Once you have enough in savings—and you believe you can confidently handle an emergency—it’s time to step to the next level and start investing your money.
And I understand that investing is scary, especially as a beginner. But it’s easier than many people realize.
There are so many ways to make your money work for you. Yet, when some people hear the word “investing,” their minds automatically shift to picking individual stocks.
Yes, this is an option—but it isn’t the only way to grow your money. You can invest in mutual funds, index funds, real estate, exchange traded funds (ETFs), etc..
And if you’re looking to invest on a smaller scale, you can also use app such as Acorns. I’ve been using this app for about three years and absolutely love it. It makes saving and investing easy.
You can also make recurring or one-time investments into your account at any time, and set up a custodial account for your kids.
2. Keeping too much cash in a regular savings account
And while we’re on the subject of savings accounts, another way you’re leaving money on the table is by keeping the majority of your funds in a regular savings account.
Now, I think it’s smart to keep $1,000 to $2,000 in a regular savings account. If you have a car repair or an unexpected bill, you’ll need quick access to money. In which case, a regular savings account allows you to withdraw cash from a local ATM.
But while a regular savings account is convenient, these accounts don’t offer the highest return. A better approach is to keep the majority of your funds in an online high-yield savings account, such as CIT Bank’s Savings Connect account.
These accounts offer a higher rate compared to a regular savings account, allowing you to grow your money faster. Plus, many high-yield savings accounts have no monthly minimums, no monthly fees, and they don’t include a debit card.
Plus, it can take one or two days to transfer money out of an online savings account. This makes your cash less accessible, which helps curb unnecessary withdrawals.
3. Not taking full advantage of a 401(k) match
A 401(k), which is an employer-sponsored retirement account, is a convenient way to save for the future. Contributions come out of your check, and some companies offer a match program as an added bonus.
Match programs vary by company, though. Some employers might match an employee’s contribution dollar for dollar up to 3%, or offer a 50% match up to 6%. Either way, it’s free money.
But unfortunately, some employees don’t take full advantage of their company’s match program, and they end up leaving tens of thousands of dollars on the table.
Increasing your retirement contribution by as little as 1% can make a big difference (especially if it allows you to take full advantage of the program).
For example, let’s say you’re currently contributing 2% of your $50,000 salary, and your employer matches your contribution 100% up to 3%. With your employer match, you’ll have $414,000 in your retirement account after 40 years, assuming a 7% return.
On the other hand, if you increased your contribution to 3%, your 401(k) balance after 40 years jumps to $621,000.
See the difference?
Understandably, you can only contribute what you can afford. But I do recommend challenging yourself and bumping up your retirement contribution by 1% every few years. Chances are, you won’t even miss the money.
4. Not using a rewards credit card
A rewards credit card is an excellent way to earn points or cash back on credit card purchases. If you’re going to use a credit card anyway for everyday expenses, it only makes sense to get something back in return.
Reward credit cards can help you save on future purchases because you’re able to redeem your rewards for hotels, airfare, statement credit, gift cards, or a check.
As a word of caution, though, some reward credit cards have annual fees to offset the cost of the program. Ideally, your annual rewards should exceed what you pay in annual fees.
Another option is to search for a rewards card that doesn’t charge an annual fee.
Of course, the more you use a credit card, the more rewards you can earn. To avoid getting into debt, only use a rewards credit card when you’re able to pay off your balance in full every single month.
5. Never negotiating your salary
According to a 2017 survey, “only 46% of men and 34% of women negotiate their salary.” And what’s even more interesting is that 70% of hiring managers expected some type of negotiation from candidates.
Not surprisingly, the biggest fear for not negotiating was fear. Many applicants didn’t want to risk losing a job offer.
This makes sense, but keep in mind that most salaries are flexible and negotiations are often part of the hiring process. So countering an employer’s offer isn’t likely to offend them.
If you’re bringing a lot of experience and skills to the table, you might be surprised by their response. But, of course, negotiations only work when you’re reasonable.
You have to do your homework beforehand. This includes researching the average salary for someone in that position (with your skill level) in your area.
Did you find this information helpful, or got a question about leaving money on the table? Let us know ↓↓