Anyone can make a rookie mistake, but there are some financial faux pas that are such no-brainers that they can actually make you look uneducated. From not knowing how to read your credit score to not knowing how to correct the information on your credit report, the list of potential mishaps is a long one. To help you keep ahead of the game, here are the top five mistakes to avoid.
Playing Credit Card Roulette
This is the game where you rack up unnecessary credit card debt trying to cash in on points, cash-back, or other rewards. While not quite as dangerous as the Russian variety, it’s almost as risky from a financial standpoint. The extra money you’re spending on things you don’t need could have paid for more important bills. It’s important to understand how this impacts your credit score and if mistakes do happen, how to correct them on your credit report.
Thinking Cash flow is Guaranteed
Diversification is not just for investments. For many, the days of being able to count on a single job or having the same profession until you retire are over. Whether you do a little freelancing on the side or invest what you can now to accrue interest, an alternative source of income allows you to have more options.
Wasting Your Savings
It’s frustrating to watch people scrimp to save only to see them blow that extra cash on nonsense. This is a kind of bait and switch we play on ourselves. We shave money off of purchases or use discounts without actually keeping any of the savings. Sure, it might be only be a dollar here and there, but you’d be surprised how quickly little things add up.
Not Saving for Retirement
You’d be surprised how many people have nothing saved for retirement or that start saving too late. If you start putting money into an IRA account every month in your 20s or slightly larger amounts your 30s, you could be set to retire by 50.
Don’t have that much to spare? You can take all those coupon savings and open a Roth IRA, with no minimum balance, and contribute the minimum amount required each month. Furthermore, if you’re not taking advantage of your employer-provided 401(k) plan, you’re missing out. Some employers will have a program where they match contributions up to a certain percent. If you don’t take advantage, you’re leaving free money on the table.
Making Bad Decisions About Insurance
Technically, this is a two-fer, but both mistakes are so common that they could probably tie into any list. The first mistake is not getting life insurance or waiting until later in life to get it. We realize that you think you’ll live forever, but the sooner you get life insurance, the lower your rates could be.
The second is taking on high premiums to get a low deductible. How much sense does it make to suffer through a high recurring payment just to have a lower threshold that you may never need to use? You could always add the money you save each month into an account in case you ever do need to make that deductible.
The two main reasons for bad financial decisions are using flawed logic and taking bad advice. We hope these tips help you stay on track. Avoid your first financial mistake by checking your credit score today: Click Here