Despite my efforts to ace my finances this year, I have made several money mistakes that mean my savings aren’t quite as large as they could be. As we approach the new year, I have taken the chance to evaluate my decisions and consider how I can kick 2022 off strongly!
Like many Brits, my lack of social life in 2021 has allowed me to make some serious savings. As well as this, I have used the past year to tweak my budgeting strategy, delve deeper into the world of investing and make a solid financial plan.
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As a result, I can safely say that 2021 has been a positive year for my bank account! However, that doesn’t mean to say that I couldn’t be any better off.
What I did well in 2021
Before I delve into my money mishaps, let’s take a look at what I will be continuing in the new year.
Firstly, I started using the Plum money-saving app to save money every time I spend. I love to shop, so this has been a great way for me to add money to a savings pot without even thinking about it! I have also used 2021 to improve my budgeting skills, and I’ve significantly reduced my monthly expenses compared to what they were in 2020.
My best financial decisions in 2021 have been expanding my investment portfolio to include cryptocurrencies and opening a lifetime ISA. My ISA has gained 4.3% in value, which has significantly boosted my savings.
The money mistakes that I won’t be repeating in 2022
Despite my efforts, my savings pot could be considerably larger if I had made different decisions. Here are four financial mistakes that have hit my savings in 2021.
1. I was late to the ISA bandwagon
I opened my lifetime ISA in August 2021, eight months into the year. While I have seen some significant returns on my initial investment, my savings could be considerably higher if I had made the move in January.
I opened my lifetime ISA with Nutmeg as a mini-experiment to see what my returns could be. Since then, I have only invested £700 but have received a £200 return! This return includes government bonuses that are put into LISA accounts. Therefore, if I had opened my account back in the new year I would have received an extra bonus payment. As a result, the value of my account would be higher.
2. I didn’t add any dividend stocks to my portfolio
This year, my focus has been on increasing my cryptocurrency investments. This has largely been due to the increasing popularity of crypto and global conversations about making the asset more mainstream.
Although my crypto investments have performed well overall, investing in crypto over traditional stocks has put me at a dividend disadvantage. Dividends are a great way to accumulate passive wealth over time, but crypto investments do not pay dividends.
In 2022, I plan to increase my dividend portfolio to set myself up with an additional source of income for 2023.
3. I stuck with my low-rate bank savings account
Despite penning an article on the topic just last week, I missed out on high-rate savings in 2021. Throughout lockdown, I managed to stash away a considerable amount into my savings account. However, I stuck with the same account that I’ve had for six years that offers just 0.01% interest!
If I had moved my savings into an account with a higher rate, I could be entering 2022 with more money to my name! As a result, I have made the decision to move my savings to a different account provider in the new year. I will be choosing one of these top-rated savings accounts which all offer much higher interest rates.
4. I didn’t cash in on any credit card rewards
My fourth and final financial downfall of 2021 was missing out on the benefits that are offered by rewards credit cards. Rewards cards offer points or miles every time you spend. Over time, these incentives add up and can save you serious money on travel and other expenses.
Failing to make the most of these rewards in 2021 has meant missing out on serious savings on my travel in 2022. I have also missed out on some excellent cashback opportunities that could have helped towards my Christmas shopping!
With just two weeks until the new year, now might be a good time to take a look at your finances and work out whether you’ve made any mistakes that you could address in 2022.