6 ways to avoid making money mistakes

Local News

Everybody messes up with money now and then. If they’re honest, they’ll tell you their regrets. Maybe you bought a house you couldn’t afford, or you moved your 401(k) savings into cash accounts after the stock market crashed in 2008.

Don’t try to keep up with the Joneses

One of the fastest ways to get into money trouble is trying to match the lifestyle and possessions of people around you. Status matters to most of us. That’s the culture we live in. But playing when you can’t pay is financial suicide.

A better idea is creating the life that fits you and you alone. That takes some fortitude. Get your financial life under control. 

Check your gym membership and unneeded tiers of cable or phone service

If you signed up for a gym membership, say in 2016, and you haven’t been back in the last two years, check to see if you are automatically being charged every year. Many merchants enjoy streams of income from customers who sign up for ongoing monthly charges, then forget to monitor the charge. 

Also, remember to cancel that extra tier of cable or phone service you no longer need. A better idea is to read bills carefully to spot services you no longer use. Call customer service twice yearly to review your accounts for better deals or features you can drop.

Don’t make indulgences habits

When you allow indulgences to become habits, you can really dig a deep financial hole. You can rationalize spending $5 on a great tasting coffee once in a while, but if you do it every day, that $5 treat becomes a $150-a-month expense. That’s $1,800 a year.

A better idea is to track your spending daily or weekly. It’s the hands-down best way to control your spending. 

Use extra savings to pay off high-interest debt

If you are paying 20 percent interest on credit card balances while your savings are earning just 0.4 percent, you’ve got things upside down. Rates on credit card balances are insane. 

If your job is safe and you have some money in savings to spare, use it to pay off high-interest debt. Then, rebuild your savings and pay off the entire card balance every month. 

Don’t go overboard with rewards points programs

This is a tough one. Capturing rewards points is like a game. It’s fun, especially if you are working toward a goal like a free trip, but you may be overspending.

A better idea is to beware of driving yourself into a financial ditch in pursuit of “savings.” The way out? Revisit your financial goals to reinforce how much more important they are than chasing those points

Don’t ignore employer contributions to 401(k)

If your employer offers a 401(k), you’re throwing away free money if you are not claiming every dollar the employer is willing to contribute to your retirement plan.\

A better idea is to never turn down free money, or that nice tax deduction you get by contributing to a traditional 401(k) plan. 

You’re allowed to pay as much as $19,000 a year into a tax-deferred retirement plan such as a 401(k). If you are over 50, you can make an additional $6,000 in catch-up contributions. 

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

WATE 6 On Your Side Twitter