Friday, June 19, 2015

Protect Your Finances By Avoiding These Errors

While it’s true that America is now in an economic recovery and citizens are getting back on their feet, you still cannot let your guard down and commit mistakes that can ruin your financial stability.

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Here are some errors that may lead to the downfall of your finances and what you can do to avoid them.

1. Letting your savings go stagnant because of low interest rates

     Although the economy has bounced back, we are still in a low-interest rate environment. However, this should not be a reason to let your money sit in a savings account that has a near-zero interest rate. Take time in shopping around and opt for a bank that pays at least one percent interest on a savings account. 

2. Failing to build an emergency fund

     An emergency fund is a pool of money that’s designated for expenses brought about by unforeseen circumstances like unemployment or a sudden trip to the emergency room. It’s essential to have because it protects your finances from going off-track and prevents you from going into debt when you have to cover expenses that are not part of your budget plan. 

     If you have to use your emergency fund, make it a point to return the money you used once you recover. It’s important to keep it constantly intact so that you’ll be prepared in case another unexpected expense presents itself. 

3. Overlooking mistakes in your credit report

     Go over your credit report and make sure that it has no mistakes, because errors can affect your loan, insurance, and even job application. Today, more and more institutions are requiring a copy of your credit score to check if you’re financially responsible.  

4. Not getting professional help 

     Attaining financial security and growth is challenging, but it becomes more daunting if you do it on your own or base your decisions only on the insights of your family and friends. There’s nothing wrong with considering your loved one’s advice, but it’s a smarter move to consult a financial professional. 

  Professionals help you analyze your financial status and provide a more comprehensive recommendation that will help address both your current and future concerns. Getting help from experts may mean having to spend for their fees, but it will be worth it. 

5. Not saving for retirement

     There’s a loan for buying a car and going to college, but there is none for retirement. That’s why it’s advisable to save up for the golden years as early as you can. 

     A good way to start is through contributing to a 401(k) plan. Likewise, understand the other sources of retirement income such as social security, annuities, and investments. Know how each of these work to see which one fits right into your financial plan and goals for retirement. 

     Also, learn how you can protect your nest-egg from possible losses through insurance. Policies that are essential in retirement are life insurance, health insurance, and long-term care insurance. You can look into combination policies such a hybrid life and LTC policy or an annuity with LTC benefits. 

Learning the financial mistakes to avoid is integral in learning proper money management.  As you work on your goals, keep these list in mind and avoid the things that can affect your financial wellness today and in the future.

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