There are many mistakes we can make with our finances. Here are a few traps you don’t want to get caught in.
When thinking about investments a bad place to start is with something that has buzz but no history. Another bad investing idea is to pay too close attention to performance and sell out of emotion. The stock market ebbs and flows; we have to give it time to get there.
Saving can seem like a difficult undertaking. If you’re living paycheck to paycheck, you may wonder where savings is supposed to come from. Not saving, however, is a big financial mistake. Having money in the bank is satisfying. It’s a wonderful feeling to look at that balance. The sooner you create that money in the bank, the sooner you take advantage of compounding interest. If a person in his mid-20s saves $3000 a year, the compounding interest will likely push the balance over $700,000 by age 65. A person in her mid-40s could double the annual savings and not accumulate near that much by the same age. My best argument in favor of compounding interest is the penny. If you started with one cent and doubled your money every day for a month, you’d have over ten million dollars.
There are expenses that can be anticipated but a lot of people do not plan for. When the expense comes up, finances can be overwhelmed. Plan your emergency fund well to cover those irregular expenses.
In today’s economy, more institutions are charging fees where there were no fees before and increasing existing fees. It can be easy to get caught paying more in fees than you’re getting a benefit from. Research services to pay as little as possible.
Finances can be overwhelming. Break down the items in manageable pieces to feel more in control.