Here are 5 ways to protect yourself today
1. Waiting to Save
For many, saving money doesn’t seem too important until you get close to retirement age. Truthfully, you should start saving now — like right now. Set up in IRA to start allocating money from your paycheck into a retirement account that penalizes you if you you withdrawal from the account too early. That way, you’re not tempted to spend the money. Also, having a portion of your paycheck being direct deposited automatically into your savings account is a great way to bulk up your rainy day fund. Life will throw all kinds of things at you and you’ll need to have the money to be ready for it. The earlier you start, the more you’ll have later.
2. Taking on Too Much Bad Debt
No, debt is not always a bad thing. Think of, “the good debt” as an investment. Perhaps you took on a student loan to finish school; after receiving your degree, you’re more likely to get a high paying job to not only repay the loan, but to live a more comfortable lifestyle. “Bad debt” on the other hand is recklessly borrowing money for things that won’t necessarily benefit you in the long run.
3. Financing Everything
You can finance just about anything these days. Cars, houses, TVs, furniture, you name it. But financing (while a great option for some things) should be carefully thought through before signing the docs. By saving up money to buy that particular item in cash, you’ll find that you’re in a much better place down the road. No loans, interests rates, or payments to worry about. Just kick back and enjoy that nice 50″ TV you earned.
4. Not Talking to Your Partner About Your Financial Goals
It’s springtime. And love is most definitely in the air. But how’s your wallet feeling?
Now is the best time to talk to your partner about your future. Perhaps you both have a vague idea of a house with a couple of kids down the road. Well, that’s great but how’s your credit score? How are your investments? Are you thousands of dollars in debt? Are you trying to start a business? What’s next for you? Talking to your partner about the goals and ideas you have is a great way to see how you values line up, will encourage you to push each other towards your goals.
5. Buying More Than You Can Afford
The “buy now pay later” mentality that credit card usage encourages can very quickly turn into a dangerous and vicious cycle. Credit cards have interest rates. So you’ll likely pay more than what the item was even worth if you don’t truly have the funds to cover it. And if this practice become habitual, the interest will be even uglier if you have multiple charges on your card. Now I’m not saying you can’t use your credit card. But if you don’t really have the money, the purchase probably isn’t worth it.