Careers and finances go hand in hand, although sometimes the relationship feels uncomfortably like a too-tight handshake rather than a lovers’ stroll in the park. When your finances are strained, it’s hard not to feel the pain in your work: Are you being paid enough? Do you need a second job?
Likewise, when work is going well and your income feels stable, new financial decisions emerge: Should you pay off a debt? Add to your retirement fund? Do you dare upgrade your car?
The beginning of a new year is a good time to think about careers and finances, even during a pandemic. Or perhaps, especially during a pandemic. This is the last of four columns about pitfalls to avoid as we (unbelievably) round the corner into year three of our COVID journey.
The earlier columns focused on mistakes to avoid in modern résumés, interview practices and career management processes. Today we’ll round out the series with financial mistakes to watch out for in our current era.
1. Worrying too much about interest rates. You’ve probably heard that the Federal Reserve will raise interest rates, perhaps several times this year. Unless you own a bank, that won’t feel like good news. Even so, the overall bump could be a point or less, so rearranging your finances may not be worth the scramble.
2. Not worrying enough about interest rates. On the other hand, if you’re carrying variable rate debt (credit cards, for example), or if you’re shopping for a mortgage, then now might be exactly the time to worry about interest rates.
3. Not paying down debt if you can. While you’re worrying about those rates, what about that credit card debt? Postponing big moves during uncertain times might feel safe, but in this case, bold action may be what’s needed. Think about selling something, finding a roommate, taking on a second job or finding other ways to pay off debt. Not sure it’s worth doing? Just remember that this step could really matter if we end up with more inflation and a tighter squeeze on household budgets.
4. Keeping credit cards on auto-pilot. Hmm… how many streaming services do you subscribe to? Is your credit card now on file with numerous online retailers and takeout delivery services? These new pandemic practices are convenient, but they can also be costly. Review your credit card statements to reveal the monthly renewals, auto-subscriptions, indulgences and other vampire charges adding up on your account.
5. Not tracking / strategizing your student loans. Despite the helpless feeling these debts can inspire, there are often unexplored strategies to consider, including refinancing to a lower rate, paying principal more quickly with a second job, negotiating lump sum payments as part of a hiring bonus, enrolling in a government forgiveness plan for eligible employment, and more. With interest and payments still on pause until April (for government loans), now is a good time to revisit your strategy.
6. Skipping government assistance options. This has been an extraordinary two years in terms of financial assistance designed to reach more people than is usually the case. At the same time, people in need (perhaps you) are often unfamiliar with accessing government programs. Fuel assistance, unemployment payments, government-paid training, health insurance subsidies, home repair programs, broadband discounts … learning what’s available could save you thousands of dollars just when you need it most.
7. Leaving benefits on the table at work. If you haven’t checked recently, it’s time to refresh yourself on what your employer offers. Whether that’s a match for your IRA contributions or just a free bus pass, it all adds up.
8. Delaying “the talk” with your boss. While you’re checking into benefits, don’t forget to ask about a raise. It may be uncomfortable, but delaying this conversation (and the potential wage increase) only costs you money. This step is especially strategic in the current labor market, when employers are concerned about the risk of losing their workers.
As you can see, the crux of these tips is about paying attention, seeking information and taking steps to improve your finances. That’s not different from any other year, but the opportunities and pitfalls presented by our current times are quite unique. Keep your eyes open and watch your step, but keep moving forward — it should be interesting to see how things turn out for 2022.
Amy Lindgren owns a career consulting firm in St. Paul. She can be reached at firstname.lastname@example.org.