In a recent report in 2022, it was found that 36% of UK workers are living month-to-month without any spare cash for emergencies. With the ongoing cost of living crisis, many workers, despite being in full-time jobs, are finding it increasingly difficult to meet their day-to-day financial demands. 

But often, it's not just inflationary pressures; it's quite often people making basic financial mistakes. We have scoured the internet to complete a list of the most common pitfalls when it comes to money.

1. No emergency funds or 'rainy day' fund

While individual circumstances may vary, most financial advisors recommend setting aside at least three years worth of living expenses in an emergency fund.

Financial advisors will insist on a rainy-day fund being set aside before any investments are recommended.

Having an emergency fund set aside will give you a huge amount of well-being and peace of mind, and you will be less likely to run up expensive credit card debt. 

You may be less likely to be frivolous and reign in your spending as a measure to protect your emergency fund. 

2. Overspending

Lifestyle creep occurs when you continue to spend more when you earn more. 

So when you get a pay rise or a windfall, prioritising your short- and long-term financial goals over buying expensive new things is indeed a very sound financial strategy.

3. Not using credit cards wisely 

Credit cards used sensibly are a great financial tool, and it has become fairly ordinary to use credit cards for buying essential items. 

Nevertheless, it is not sound financial advice to willingly accept double-digit interest rates on products like petrol, food shopping, and various other goods that are consumed well before the bill is fully paid. 

Credit card interest rates substantially inflate the cost of these purchases and, if not used sensibly, can be destructive to an individual's personal finances.

Only use a credit card if you can pay it off in full each month.

4. You never review your finances

The outcome of your financial future hinges on decisions and sacrifices made today.

Although countless hours are spent in front of the TV or on social media, the idea of dedicating just one hour a week to financial matters is impossible for many. 

It is essential to have a clear vision of your financial destination. 

Burying your head in the sand is never sound practice. Ensure checking your finances becomes a top priority.

5. Not saving enough for retirement 

Delaying retirement savings may seem tempting, but starting early ensures a greater retirement income. 

Pensions provide tax relief and benefit from compound interest, allowing small amounts to grow into substantial savings. 

Moreover, employers often contribute to workplace pensions, and increasing personal contributions can yield additional benefits. If you're unsure about retirement planning, Regulated Advice can connect you with a financial advisor who can assist in devising a suitable plan. 

6. Using a credit card at an ATM 

Do you own a credit card? Avoid using it to withdraw cash at an ATM. 

Not only will you incur charges, but this transaction will also be documented on your credit report, potentially raising concerns for future lenders.

7. Being a loyal customer 

Despite the common assumption that remaining loyal to your bank or service provider is advantageous, the opposite is often true. 

Switching banks can offer cash rewards, and opting for an alternative broadband service provider may lead to a cheaper service.

It may be best to explore other options to secure the most favourable deal, particularly when facing an imminent price increase.

How can a financial advisor help?

If you're struggling to meet your financial goals, a financial advisor can help. 

They will look at your circumstances and future goals to help you achieve them and offer vital guidance, therefore avoiding costly mistakes. 

Let Regulated Advice match you with a financial advisor for expert advice.