As a career coach to professionals, I have come to realize that when it comes to people making decisions about their career and their lives, one of the key areas of anxiety for them is understandably around their finances. I guess it makes sense that when you have bills to pay, multiple responsibilities such as taking care of your children, then perhaps leaving a fairly lucrative salary can be seen as being a tad indulgent.
Which is why I believe that managing your finances effectively from day one, is one of the best ways to give yourself freedom and autonomy down the line. It ensures that should you want to pivot into another career, you have greater ability to do so. I find that a lot of emphasis is put on what career to enter into, but not as much is written about how to organize your finances from the moment that you graduate from University.
So whether or not you are at the start, middle or tail end of your career, here are some mistakes that people make with their money and that you can hopefully avoid.
Not negotiating your salary at offer stage
One of the trends I noticed in my former career as a headhunter was the fact that women were less likely to ask for the salary that they were worth and less likely to negotiate offers altogether. Now when I provide career coaching services for professional women, I focus on helping them to work on their money mindset and teach them strategies for negotiating offers more effectively. The key thing to remember is that by the time you get to the offer stage, it is clear that a company is really interested in you and you have leverage over the salary conversation. The prospect of an offer being rescinded is something that scares people from negotiating the salary that they have been offered, but it is rare that an offer will be rescinded, if the negotiation process is handled well. The compound effect of not negotiating for the best salary possible each time you make a move can be significant over the course of one’s career.
Not opting into the company pension (or 401k) plan
I can see how retirement appears to be a very distant possibility to a new graduate, but trust me when I tell you that time flies by, and before you know it, you are twenty years into your career. Think about how much you could have saved if you started from day one. The beauty about opting into a corporate pension plan is that you often do not have to do much, as most of the admin is handled for you, and you own the pension, so you can take it with you when you leave that employer.
Not paying off all debt immediately
Debt repayments can be financially debilitating and can really put a strain on your overall finances. Most money experts advise that you pay off all non property related debt immediately, to give you the freedom to really double down on your savings and investments
Not saving enough
The reality is that so many people live way beyond their means, and if they were to lose their jobs, they would quickly start to struggle. I have a friend who lives on way below her salary that she and her husband have positioned themselves so that if they both lost their jobs, they could survive for a year without working, before needing to tap into their long term savings. Ideally a chunky proportion of your monthly income (about 10-20%) should be going into your savings account.
Not learning enough about investments
I don’t think that financial knowledge is taught enough at school and in homes generally. The emphasis is on academic pursuits and getting a job, rather than also including financial knowledge, entrepreneurship and personal development. The lack of knowledge of basic personal financial principles leads people to develop negative habits and hold on to them for far too long.
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