| by Glenn J. Downing, MBA, CFP® |
Channeling David Letterman and all those Top Ten lists. I thought it might be fun to compile one of my own. To wit: The Top Five Mistakes People Make With Their Money. This is a list compiled after about 30 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 Miami on a daily basis, you’ve spent ($18/day * 20 days) $360 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 much 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. The roof will leak. Or we have a Coronavirus shutdown. 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 401k. It is very common for employers to match your contributions up to a certain percentage. Fifty cents on the dollar up to 6% of earnings 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!
…and now, Mistake #1 – my pet peeve
You over-withhold 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.
Like Top 10 Lists? Here’s another: My Top Ten List of things to Waste Money On.
