Thinking about David Letterman retiring and all those Top Ten lists. I thought it might be fun to compile one of my own. To wit:
The Top 5 Mistakes People Make With Their Money
This is a list compiled after about 17 years of experience.
Mistake #5: You eat out way too much. This is what your kitchen is for! If you get a sandwich and a coffee in Coral Gables on a daily basis, you’ve spent ($10/day * 20 days) $200 in a month! How about all that fast food? I’m seeing families who spend several hundred dollars each month eating out, when a little planning and Publix time could save most of that money and everyone would be healthier and richer for it.
Mistake #4: You don’t have enough life insurance. What happens if you get hit by a bus? Are your existing savings enough for your surviving spouse and children? Term insurance is relatively cheap and easy to obtain. No excuses. See Mistake #5.
Mistake #3. You don’t have an emergency fund. Emergencies are not a matter of whether, but of when. The transmission will go out. The A/C will eventually need replacing. Murphy’s Law still prevails. Anticipate the expenses, and save toward them, thereby keeping yourself from going into debt.
Mistake #2: You don’t contribute up to the employer match in your 401(k). It is very common for employers to match your contributions up to a certain percentage. Fifty cents on the dollar up to 6% of earning is a common formula. That means that if you contribute only 4%, and you earn $75,000, you’re leaving $750 on the table. For shame!
. . . drumroll please . . .
And now, Mistake #1 – my pet peeve: Over withholding on your federal taxes. People like to get big refunds. Makes no sense. All you’re doing is getting your own money back at 0% interest. If you have a $2400 refund, that’s an additional $200 you could’ve had in your paycheck each month. See Mistakes #3 and #4.
For more on Glenn, and how he can help with your financial plan, visit www.cameron-downing.com.