5 Days To Go For The New Year: Do Not Repeat These 5 Money Mistakes In 2024

Just a handful of days are left for the new year 2024 to begin. While we all must be in a holiday mood and busy remembering the memories we created throughout 2023, why not take this upcoming new year as an opportunity to strengthen your financial health too?

With 2024 knocking on our doors and arriving in just five days, let us understand five money mistakes that you should avoid so that you can begin the new year on a financially strong note:

5 Days To Go For 2024: 5 Money Mistakes To Avoid

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1. Not having an emergency fund to fall back on

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If the COVID pandemic and mass layoffs have not served as a wake-up call for you to build a rainy day fund, then perhaps what will? Life's uncertainties every now and then remind us why an adequate emergency fund is not an option but a necessity. An emergency fund will act as your financial cushion to fall back on if you suddenly face a financial emergency, such as a job loss. This fund will help cater to your monthly recurring and mandatory expenses.

Ideally, an amount equal to at least six times your recurring monthly mandatory expenses is a must to be kept in an emergency fund. Your mandatory and recurring monthly expenses, such as rent, utility bills, insurance premiums, children¡¯s education fees, loan EMIs, etc., should be included in this emergency fund so that in case your income gets disrupted due to layoffs, this fund can take care of such expenses for at least six months.

2. Not making your money work for you through investing

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All of us work hard every day to earn money for ourselves and our loved ones. This helps us live a comfortable lifestyle, right? But working hard to earn money isn't enough to build wealth. For wealth creation, you have to make your money work for you as well instead of letting it sit idle in your low-interest savings account.

That is exactly why you should keep investing, no matter how big or small the amount is. After all, something is better than nothing, right? So, while you keep on working hard to earn, ensure that you simultaneously make your money work for you by investing in different asset classes as per your risk appetite. In this way, when faced with a financial emergency, such as a layoff, your investments and accumulated wealth can come in handy.

Also Read: List Of Startups In Which Virat Kohli Has Invested

3. Not buying a life and health insurance policy for you and your loved ones

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Insurance is not an option but a necessity for each one of us, irrespective of your income, number of dependents, age, etc.

So, amidst the endless list of excuses that just add to the mayhem, what most people still fail to realise is the importance of buying life insurance. In fact, the earlier you buy, the better it is. That's because the more you delay, the higher the premium you end up paying. Moreover, looking at the huge coverage provided by term insurance, the premium involved is on the lower side, especially when compared to other life insurance policies like ULIPs or money-back policies.

So, doesn't it become a prudent move to purchase life insurance as early as possible? This smart move not only fetches you lower premiums but also relieves you from the stress of leaving your loved ones in a financially vulnerable situation that can jeopardise their future in the absence of an adequate life cover amount as replacement income upon your unfortunate and untimely demise.

Besides life insurance, do not forget to learn the most important lesson from the COVID pandemic, i.e., to have health insurance for yourself and your family. Health insurance would provide you with much-needed assistance in dealing with sky-touching medical costs, which otherwise are capable of eradicating your lifelong savings in one go.

Even if your employer provides health insurance, it's better to not remain solely dependent on it, as that insurance can turn out to be insufficient and would cease to exist once you exit that organization. So without further ado, act quickly towards purchasing adequate life and health insurance for yourself and your family in this new year, 2024.

Also Read: Why Life Insurance Premiums Are Cheaper For Women

4. Not paying attention to your credit score

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Simply put, a credit score is a three-digit numerical representation of your credit history and generally ranges between 300 and 900. It depicts your creditworthiness on the basis of your past credit card and loan repayment behaviour.

Why is a credit score important, you may ask?

Credit score is used as one of the first filters to be factored in by banks and other financial institutions while evaluating your loan and credit card applications. It helps the lender assess your creditworthiness through past repayment behaviour, which also indicates the degree of likelihood of you defaulting on the loan or credit card repayments in the future. A good credit score will depict you as more trustworthy, whereas a low or no credit score would make the lender take a cautious approach when deciding whether to accept or reject your application.

Having a low credit score may lead to rejection of your loan and credit card application. If lenders go ahead and give you a loan despite your poor credit score, chances are high that the interest rates applicable to your loan may be relatively higher.

5. Not taking up side gigs for passive income

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Whether you are an entrepreneur, engineer, doctor, journalist, or earning your bread and butter through any other career, there is some hidden talent, creative outlet, or hobby that we are passionate about, right?

So, when you enjoy doing something and are even good at doing it, why not monetize it by turning it into a side gig?

While the list can be endless, some of the side gigs can be content creation, storytelling via podcasts, online tutoring, social media influencers, selling handmade, personalised goods, taking up vlogging, photography, delivering food or parcels part-time, renting out the extra room in the house, transcribing audio files, etc.

To learn more in detail about these side gigs, click here.

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