Everybody makes mistakes with money. The important thing is to learn from our mistakes. Better yet, learn from other people’s mistakes – it’s a lot cheaper.
Here are common money mistakes many people (certainly not you!) will make throughout their lives.
Living Off Credit Cards:
You pay your regular bills with your paycheck, but then you want a few more luxuries, so you charge them. Before you know it, trying to pay off that credit card is one of your biggest bills of all – and you have even less money left to pay the others (you know, like food and shelter).
Not Saving and Not Contributing to a 401K or IRA:
Due to the magic of compound interest, a little saving now can really add up in 20 years. Take advantage of that 401k at work, check out IRA options and try to build up an emergency fund for things like car repairs or medical bills (or you’ll end up charging them – see mistake #1).
Not Investing, or Investing Too Safely:
Now is the time to invest in growth stocks and other high-return investments that may be a little riskier. Over the long run, the stock market generally goes up – and you have a long run before you need retirement money. You’re not in this alone; our Wealth Management consultants can help.
Going From “I Do” to “I Owe”:
We want you to have the wedding of your dreams, we really do. But if taking the plunge means plunging yourself into serious debt, it could be a financial nightmare for years to come.
Not Discussing Money with Your Spouse-To-Be:
Financial disagreements are one of the leading causes of divorce. Find out how your fiancé handles money before the wedding, and agree on a financial plan together.
Buying Too Much House:
You just had to have the home theater, the chef’s kitchen, the 3-car garage. Which means you’ll be financing it for 30 years to even manage the payments. Do you want to still be making a house payment when you’re 75? (To get a feel for what you can comfortably afford, consult our Mortgage Calculator).
Spending Too Much on Your Kids:
We all want our kids to have the best, so we understand the temptation to splurge on that Disney World vacation or a prestigious private school. Just remember that keeping your debt in check will benefit your whole family in the future.
Focusing Too Much on College Savings, and Too Little on Retirement:
This goes along with #2. If you don’t have enough money to retire on, who will end up supporting you? Your college-educated kids. So, keep those 401K and IRA contributions up.
Giving Up on Investing:
Just because retirement is getting closer, doesn’t mean you
can’t still invest and make a little profit. Every penny counts.
Claiming Social Security Benefits Too Soon:
You can claim benefits beginning at age 62, but if you do, you’ll get less annually. Maximize your benefits by working until at least official retirement age (66 or 67, depending on your year of birth).
Borrowing from Retirement Funds:
Dip into your 401K or IRA early and you’ll pay taxes plus a penalty. Do this only for extreme emergencies.
It’s never too late to learn from your financial mishaps. Now that you’ve signed up for Michigan First Credit Union’s Money Moment, you’ll be getting the customized financial tips you need in your inbox every month.