5 Very Common Money Mistakes
& How to Avoid Them
By Gary Webb
1. Living paycheck to paycheck
Too many Americans don’t have enough money in savings. According to
CareerBuilder, nearly 80% of Americans live paycheck to paycheck to
make ends meet. Lest you think this applies only to those who are in
low-wage positions, nearly one in ten workers who earn over $100,000 or
more are in the same boat.1 Pay yourself first by stashing away funds
after each pay period. Grandma said there would be a rainy day and let
me tell you, the raining days come to each of us. The key is to be
prepared.
2. You can’t start too early saving for retirement
I’ve already had several conversations with my almost college-age daughter about retirement planning. She seems less than enthusiastic. I get that. There are many other things she’s focused on today. But when she graduates from college, the seed will have been planted, and she’ll be mentally ready to sign up for her 401k with her first employer. I have a friend who is in his late 40s. He can probably retire comfortably by 60. Yet he regrets waiting until 30 to begin putting money into a retirement account. What if he had started in his early 20s?
We all know the reason earlier is better–it’s the magic of compounding. Those
deposits made in our 20s and 30s will have a lifetime to grow. Don’t waste the
chance to increase your savings now. You’ll never get that time back!
3. Do you know where your money goes?
Without a spending plan or budget that tracks income and expenses, you may
wonder why there is more month left at the end of your money, and not more
money left at the end of your month.
Focus on the essentials–rent, mortgage, utilities. Leave room for your financial
goals–repaying debts, retirement, emergency funds. And have some fun by budgeting for lifestyle choices such as recreation, hobbies, vacation, etc. If you are unsure how you might get started, my team can help you develop a spending plan that will help get your financial house in order.
4. Credit cards and personal debt
Credit cards are a fantastic convenience and most have rewards. But don’t place
yourself in bondage to monthly payments. Pay them off monthly in order to avoid interest charges and nearly never ending payments.
If you feel like you’re buried under credit card debt, student loans, and personal
debt, you’ll need a plan of attack. Let’s talk. Just knowing there’s a road map to
debt-free living will be liberating.
5. Those luxury purchases
When looking for a new vehicle, what you don’t know can hurt you. It’s not just the amount of the car payment: Is an expensive grade of gasoline required? What is the gas mileage? What will it cost to insure? What will the annual license renewal run? If your car payments fit comfortably into your budget, and you can answer these questions you’ll sidestep any surprises that deter your financial goals.