Throughout life there are many ways to achieve financial success. Some of that success can be achieved by avoiding these common financial mistakes.
Under-insuring your property.
Most homeowners have insurance. Experts say it’s smart to review your insurance coverage each year before the policy renews, but most people do not review their policies for years at a time, and often wind up under-insuring their homes. This can happen as a result of adding to the property, acquiring more valuable possessions or simply the increasing value of your home. Angie’s List recently polled its members and found that nearly one-third of those who responded hadn’t checked their home insurance policies for two years or more.This is also true of auto and life insurance.
Simply put, if you have under-insured your property and you suffer damages, the money you receive from a claim may not be sufficient to pay for your losses. The safest course is to review your policies shortly before they renew each year, and revise your coverage for any property that has increased in value.
Paying too much interest.
If you carry a balance on a credit card, you are probably paying some of the highest interest rates possible, and it’s simply money thrown away. Having high balances looks bad on your credit history, too; you should never have outstanding balances of more than one third of your credit limit.
If possible, pay your monthly bills in full, PLUS a little extra to lower your outstanding balance, and never make late payments. You’d be amazed at how much money you can save in credit card fees and expenses.
Insufficient emergency savings.
If you lose your job or become unable to work, how many months of bills could you pay? Often one major accident is all that stands between you and financial hardship. Try to accumulate between three to six months of financial resources to keep on hand in case this happens to you. Review and consider appropriate short-term and long-term disability insurance.
Purchasing with credit.
Consider saving enough money to purchase bigger items versus buying on credit. Do you remember saving money as a child to buy a bike or a favorite toy? Today, too many people decide as adults that they should buy first and pay later. Why not return to the old way of purchasing? It may just keep you out of a financial hole.
Not protecting against fraud.
With advances in technology have come more devious ways to steal your identity. This includes theft of tax information, social security numbers and credit cards. Weaknesses in online security, such as low-strength passwords and user IDs, can also make it easy for criminals to access your private data and financial records.
Don’t create a password that has personal information such as family names, street numbers or other identifiers that are easy to look up or figure out. Don’t give out credit card information to phone callers unless you know them. And beware of “phishing” scams in emails and on bogus web sites. Conduct a regular review of your online profile and credit reports to identify suspicious activity before it gets out of hand. It’s also good sense to choose different passwords from one login to the next, and to change them at least every year.