The ability to retire with very few financial worries is the goal that millions of people working today have set for themselves. Many others however don’t exactly have quite the motivation necessary to save all that aggressively yet for retirement and, while we won’t pass judgment, what we will do is advise that if you’re not going to start saving you should at least do your best to not damage your finances or your credit. (You may just need to rely on it in the future.) With that in mind we put together a number of examples of financial blunders that you definitely should avoid. Enjoy.
One big mistake that many people make is that they marry someone who is clueless about finances and spends money wantonly and wastefully. If you have any financial goals that include saving for retirement, putting aside and emergency fund or someday purchasing a home, it’s quite difficult if you are “better half” is spending money like there’s no tomorrow. The fact is, one of the top five reasons for divorce in the United States today is money problems. The lesson here is to really know that spending habits of your future spouse before you say “I do”.
Getting deep into credit card debt is another no-no and, if you have a habit of whipping out your credit card without much thought, the debt you accrue can add up very quickly. A small purchase here, there and everywhere will, in no time at all, add up to a huge balance on your next CC bill. Even worse, the interest that you’ll need to pay off on your credit card debt will end up costing you a small fortune, even if you purchase items on a credit card with a 0% interest for the first year. The lesson here is to always use credit cards responsibly and do your very best to pay off your credit card bill at the end of every month.
While you might not be the type of person that saves aggressively, putting away something from every paycheck is really vital if you don’t want to someday be facing an emergency situation with no financial backup whatsoever. If your employer offers a 401(k) you should definitely take advantage of their match if they have one as well as using a Roth IRA to allow your money to grow tax-free. The lesson to be learned here is that, someday, you are going to want to increase your savings and it’s much easier if you start with a little bit already in the bank.
Trying to “keep up with the Joneses” is a problem that many people have as they see their neighbors and their family members purchase high-end or newer products and feel the need to do the same. One of the worst things about overconsumption is that, if you’re forced to suddenly lower your style of living, it can be quite difficult. In many cases it may well mean that you have to work a few extra years as a senior citizen to pay for the luxury of having driven a fancy car or lived in a too big house when you were younger. The lesson here is that, in most cases, you can actually live a nice life without purchasing every new electronic, a fancy sports car or a gigantic “McMansion”.
Our last financial blunder to definitely avoid is not having a budget and thus not knowing where your money goes every month. Simply put, if you don’t know where your money is going it’s going to be much harder to cut down on expenses because you won’t know which expenses can be cut down. Even if you don’t put all of that money into a savings or retirement account, you may find that you have enough extra money by cutting down on needless expenses that you can take a longer vacation or do something else that is more worthwhile. Besides that, you’ll have less stress and possibly even be able to make more money because you’ll be more productive. The lesson here is simply that having and using a budget is a very good idea in order to stay financially healthy.
If you have questions or concerns about your finances, would like to know how to open a Roth IRA or need advice about saving for retirement, please send us an email or leave a comment and we’ll be sure to get back to you as soon as possible with advice and answers.