The 10 Dumbest Everyday Mistakes People Make With Their Money
Most Americans (82 percent) feel optimistic when it comes
to their financial futures, according to the Family Financial
Forecast study commissioned by State Farm Life Insurance Companies.
Most Americans also have similar goals in mind when it comes
86 percent value having financial security
73 percent value saving for retirement
70 percent value paying down debt
68 percent value building a savings account
Many Americans' perceptions about their financial futures
are optimistic, while their actual planning and budgeting
Interestingly, most would also like their money to go toward
57 percent would like to provide long-term financial
security for their children
58 percent would like to pay for a child's education
54 percent would like to care for parents or grandparents
42 percent would like to buy a first or new home
However, in reality, many of these families are making major
mistakes -- from not planning for emergencies to making their
ATM passwords easily accessible -- that could keep these dreams
from becoming a reality.
"It's encouraging that families feel good about their
financial futures, but this confidence should stem from adequate
financial planning and preparation," said Susan Waring,
CLU, executive vice president and chief administrative officer
of State Farm Life Insurance Companies. "Americans cannot
just 'hope for the best' when it comes to financial planning.
All families must take a critical look at where they are financially
and lay out a clear road map that guides them to their hopes
How many of these money mistakes are you making?
1. Keeping confidential information with you.
You should not carry your social security number, ATM passwords,
bank account numbers, credit card numbers written in a day
planner or any other personal, financial information with
you. In the event that your
wallet or purse is stolen, a thief could easily charge
thousands of dollars to your credit cards or take money directly
out of your bank account.
2. Throwing away a vulnerable computer.
Computers are an efficient tool to store all of your financial
records and manage your money online. However, if you get
rid of your computer with the hard drive intact, all of your
personal finances (and other information) are free for the
When you get rid of your computer, clean the hard drive,
then, said Kevin Barrows, a former FBI agent who now works
for Renaissance Associates, a computer forensic firm, "Smash
it. Do whatever you have to do to make sure someone doesn't
3. Giving out your social security number.
Writing your social security number on a check -- particularly
if you plan to mail this check to a business or other third
party -- leaves you vulnerable to identity theft, in which
someone could easily clean out your life savings. You should
also be extremely wary of giving your social security number
over the phone and on the Internet.
Many scammers will call a person pretending to be from an
organization and ask for your name and social security number.
The same goes for Internet
phishing scams. But once you give that out, the person
can easily open fraudulent accounts in your name. A cautious
approach would also be to not include your social security
number on your driver's license.
4. Using file sharing computer programs unwisely.
File sharing programs commonly used to download and share
music are capable of sharing a lot more than that. These programs
can scan your computer's hard drive and find tax returns,
bank statements and anything else you've got saved on there.
To avoid sharing your financial information with the world,
you must specify which files to share and which to keep private
if you're going to use these programs.
5. Writing your pin number on your ATM card.
The absolute worst place to keep your pin number is directly
on your ATM card. This, of course, is because in the event
the card is stolen, the thief can easily access your account.
When it comes to joint credit accounts, both partners
are responsible for paying off debts -- regardless of
who made the charges.
6. Spending a lot on items you don't need.
It's very easy to nickel-and-dime your way to the poor house.
To avoid doing this, keep track of what you spend your cash
on for a week (including the mocha on your way to work, the
money you give the kids and the smoothie at the gym). "In
three weeks, you'll be able to see where the money is going
-- like, gee, the kids are tapping me for $20 every time I
turn around . . . so your kids may be your money leak,"
says Ginita Wall, director of the Women's Institute for Financial
Education and an advisory board member for the GE Center for
Financial Learning. "Time to corral in the kids -- no
more 'Bank of Mom and Dad.'"
7. Not paying off credit card debt.
A good debt is something that will help you build wealth over
time -- such as a loan to go back to school or a mortgage.
Bad debt is the kind that's accrued from charging groceries,
clothing and other everyday items, then having to pay much
more than they're worth in interest.
"If you pay only the minimum amount due on your credit
card, you may end up paying more in interest charges than
what the item cost you to begin with," said Janet Kincaid,
Federal Deposit Insurance Corporation (FDIC) senior consumer
To avoid this, pay off your balance in full whenever possible,
shop around for low-interest-rate cards, don't carry a lot
of credit cards (to resist the temptation to use them) and
don't make purchases you know you won't be able to pay off
in a short amount of time.
8. Not having a plan.
Many people procrastinate when it comes to finances, but studies
have found that planning is associated with wealth accumulation.
Rather than living paycheck to paycheck, you should develop
a plan for saving money for emergencies, for retirement and
for other expenses, like your child's education and family
vacations. The sooner you develop a plan, the better off you'll
9. Not negotiating a raise.
Negotiating a raise for your first salary offer can add up
to more than $500,000 by age 60. Don't do it after that, and
you stand to lose thousands, if not hundreds of thousands,
of dollars. Take, for instance, a negotiated salary raise
of $2,000 a year. Over 30 years, that's another $60,000.
10. Not paying attention to joint accounts.
If you and your spouse open joint credit accounts, you are
both responsible -- either jointly or individually -- for
any debts. So if your partner charges a huge debt, then can't
pay it off, you are still responsible. Likewise, if late payments
are made, both individuals' credit reports are negatively
affected. Keep an eye on any account with your name on it,
and talk with your spouse if problems arise. Money
is the most common thing that couples argue about, so
in some events you may be better off keeping your accounts
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