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Mistakes During Money Managing and Their Possible Solutions

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Managing your own money isn’t quite easy, especially when you’re inexperienced person at financing or budgeting. We can’t start well in the very beginning and we usually start by making some mistakes. Here are a few of them you are going to learn now: they are common money management and personal financial mistakes.

Don’t hurry to cash out 401(k) retirement plan, when leaving your job  – This is always the silliest option to do after some other ones, like leaving money in the employer plan or involving into IRA, because you’re required to pay taxes for money at income tax rate and even be a reason for early penalty of 10 percent, unless you reached 59 or older. Because of not a lot of people have known this fact, around 40% of them do take cash from the 401(k) plans.

When your account balance goes down, it’s actually really hard to think of some contributions to the retirement plans; however did you know it’s actually an advisable thing to do? First of all, when financial markets fall, it’s a very nice time to do some investments, because of lower asset prices. That’s why it’s going to be much cheaper. At any other time selling high of what you purchased low, will bring profits.

We are always happy, when our income rises higher and higher, so that we have more to spend on things or, on the contrary, save a little bit more. And the best choice is going to be last one. Lifestyle inflation – that’s how it’s called doesn’t mean you should increase your living expenses too much; you might want to stay with the same budget, but try to save the extra for later. However, don’t feel affected to not splurge on things you are really wanting.

Put in your must-pay list paying off bills in the very first place, because it has to be your priority. Forgetting isn’t an excuse for non-paying. Maybe you don’t have any money left? Well, according to your budget list, you should be done with bills right after you get your paychecks. Make it as a habit to avoid late consequences, like huge fines and possible turning your electricity off. If you’re that kind of person, who shouldn’t rely on the memory, online payments are really convenient, so you better sign up for them to make automatic payments done by your credit card company. At last, you can check out Canada personal loans without credit check for emergency monetary situation, but, please, make sure to pay back on time.

What is going to be really surprising for you is that you simply have been mistaken by thinking that credit card balance influence your credit score for better. But unfortunately, it’s not true at all. Sometimes it even harms your score and you may get high interest rates. Experts suggest paying off balances each month, if the money is being taken out of savings account. If it’s not possible, then you should do at least minimum of what has been borrowed.

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AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

2 Comments

  1. Until recently, I didn’t realize how much we are penalized for taking out of a 401k! Wow, everyone with a 401k should read this.

    • Yeah, it’s a huge chunk. 99.9% of the time, it’s best to leave that money alone.


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