There are many financial mistakes that people make during the course of their working years and many of them are minor. There are, however, several that can be considered blunders. These are the type of mistakes that everyone needs to avoid and can avoid if they are aware how big of a mistake they are. The following are four of the largest.
Having too much debt
How much debt is too much? Generally speaking, you can have a mortgage and perhaps a car loan, but any credit cards should be paid off each month. The interest on credit cards when you are carrying a balance is very high, and over the courses of 20 years or more, the cost of servicing credit card debt is crippling to your personal finances. Use credit cards for convenience if you must, but always have the money to pay the bill when it is due each month.
Spending too much money
Assuming you are not borrowing to buy the things you want, because that is a debt issue, you need to control your spending. When you spend too much money on things that you don’t really need, it crowds out the ability to save money. You should always be saving money for a rainy day. Unexpected expenses pop up in everyone’s life, and you need to have extra money for this. The simple solution for this problem is to budget your money to include a monthly savings amount.
Not saving for retirement
People often will put this off and have nothing but social security when they are old. Unfortunately, it is never enough, and you will end up working after retirement age. Start investing in a retirement account today, the earlier you start saving the more likely it will pick up momentum for the golden years.
Saving for retirement but cashing it in early
This is a huge mistake. Once you have a retirement account, it should never be touched for any reason. There are situations where you may have medical emergencies, but it pays to have the foresight to get more medical insurance. A good catastrophic health insurance policy can go along way to protecting your retirement account. Do not cash in your retirement to pay bills. If things become so dire that the situation is that you may need to go through a bankruptcy, with certain rules and regulations it is possible your retirement will be protected. Make sure you get consultation from an attorney to ensure this. Regardless of your situation in life, always regard your retirement savings as sacred and never touch it.
In the long run, if you want to avoid making big financial mistakes, simply avoid the four biggest ones listed above, and you will be on a steady course of financial stability.
About Author: Hannah Whittenly is a freelance writer from Sacramento, California. A mother of two, Hannah enjoys writing on blogs of all niches. Even if you need bankruptcy help make sure you keep financial planning a continuous goal.