What would you list if someone asked you to name the nastiest money habits? Money Central offers ten in this piece and I want to share with you the ones I think are the worst:
- Spending without a budget.
- Carrying a balance on credit cards.
- Not investigating disability insurance.
- Failing to see how little purchases add up.
- Not matching employer's contribution to retirement.
- Paying everyone else, saving "what's left."
- Not managing your investments.
Just for the record, the other three are either subsets of one of these seven or not in the league of "nastiness" that these are.
I've written on all of these, so I'll mix past posts in with my thoughts.
Budgeting -- There are several advantages of budgeting with helping you keep more cash right at the top of the list. You doubt that? Ask the average millionaire. He has a budget and it's been a key part of him becoming a millionaire. As far as my recommendation, I suggest you select one of three ways to track your spending and if you go with the electronic option that you select You Need A Budget.
Credit card balance -- If you have a budget and only charge what's in that budget, you should never have a credit card balance. Of course you may be in debt now, so first you'll want to get out of debt and pay it off one of these nine ways. (Also see Strategies for Dealing with Credit Card Debt). Then, once you're out of debt, be sure not to get back into it. Be aware of credit card hazards and how to avoid them and avoid the four credit card traps and follow the eight commandments of credit cards. (BTW, one key to avoiding credit card debt is to set up an emergency fund. Free Money Finance recommends Emigrant Direct for emergency savings.)
Disability insurance -- You must have disability insurance. Based on the odds, there's a better chance you'll use it than that you'll use life insurance.
Little purchases -- Even a small leak can empty your money bucket quickly. If you can control your spending, you can become wealthy.
401k match -- Not getting your full 401k match is one of the 12 biggest money mistakes you can make.
Saving last -- You need to pay yourself first. It's the main point in The Richest Man in Babylon, one of the top money books of all time.
Investments -- I disagree with them a bit on this one. I don't think great investments take a lot of management. I prefer an investment plan that takes 15 minutes.
I just read Missing Fortune 101 and am looking for the next great finance book.
Posted by: Lorett | March 07, 2006 at 02:38 AM