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7 Financial Mistakes to Avoid in Life

7 Financial Mistakes to Avoid in Life
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By    |   Thursday, 07 September 2017 02:31 PM

People learn from the mistakes they make in life, but they can get ahead by avoiding bad financial choices in the first place.

There are plenty of ways to prevent financial chaos in the future by understanding the basics of spending and saving.

Financial plans may change as time goes on for each person because of unexpected challenges or adjustments that need to be made. The idea is to avoid financial mistakes that could devastate your savings and well-being.

Here are seven financial mistakes you can avoid in life:

  • Ignoring employer-paid benefits — Many employers offer everything from health insurance and 401(k) retirement plans to life insurance and short- or long-term disability. These programs protect you and your family and help accumulate money over time. Talk to the human resources department about the important details of these plans.
  • Unaffordable financing — A person may want a big house or brand new car but can’t afford it. Don’t pay more than 35 percent of your pre-tax income for monthly mortgage payments, Brightpeak Financial advises. Look at the total cost of a car and not the monthly amount to save in the long run.
  • Credit card impulses — Credit cards shouldn’t be used just because you want something and don’t need cash. Card balances and interest can add up significantly. Avoid impulse shopping on credit if you can’t pay off the balance in 24 hours, the Balance points out.
  • No budget planning — Budgets work for people of all means, not just those trying to make ends meet. It helps people understand how much they have to spend each month. A budget can be as simple or complex as people want. The idea is to pay off bills and debt while saving money.
  • Too much student loan debt — The student loan debt crisis has caused financial turmoil for many young people. Develop a financial plan for yourself or children entering college to take on debt you can realistically afford.
  • Borrowing from retirement savings — People in a financial bind should find other ways to get or earn money instead of taking money out of qualified retirement accounts. This is a reason to always have an emergency fund on hand. With an IRA, early withdrawals are taxed and subject to 10-percent penalties. Early withdrawals also hurt a retirement account’s potential growth, notes Merrill Edge.
  • Not saving enough — Unfortunately, many people think saving for retirement is only for older folks. Retirement planning is money in the bank that grows faster the younger you invest. Avoid spending fun money as much as possible and put it into savings.

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Here are seven financial mistakes you can avoid in life.
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Thursday, 07 September 2017 02:31 PM
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