Did you know that April was National Financial Literacy Month?
Yes, the same month our taxes are due, our financial literacy is highlighted. The simple fact is that we’re all guilty of some pretty foolish money mistakes. In fact, even the savviest consumers have committed one or more of the following financial follies.
1. Living Large
Credit cards are to be used and managed with extreme caution and diligence, not as a mechanism for keeping up with the Jones’. Sadly, one in four Americans has more credit card debt than money in their emergency savings. If this sounds familiar, now is the time evaluate your options and possibly seek professional assistance in getting on the right financial track.
2. Praying for a Tax Return
Owing the IRS is no fun, but consistently receiving huge tax returns isn’t ideal, either. Getting a big chunk of change every spring may seem like a great bonus, but ultimately you’re withholding too much from your paycheck and giving the government an interest-free loan. You could use that money during the year to save, invest or pay down debt. Refer to the 2013 IRS Withholding calculator to determine the right amount of withholdings, and then request a new W-4 from your employer.
3. Failing to Compare
Whether you’re in the market for a new refrigerator or need some repair work done on your air conditioner, failing to compare prices and bids is a foolish mistake that can cost you dearly. This is especially true since the Internet makes it easy to research prices and find local service providers. Even products like ink cartridges can be found on-the-cheap by using InkjetWilly.com to get the best price.
4. Putting Off Buying or Saving
Procrastination often leads to some of the biggest financial blunders. Waiting until the last minute to purchase airfare, for instance, will cost you a pretty penny on travel. Holding off on creating an emergency savings account can result in serious debt when the unexpected occurs. Ultimately, proper planning is the key to financial success and putting off money decisions will result in serious consequences.
5. Paying for Unused Services
It may seem simple to avoid paying for things you don’t use, and yet you may be guilty of it on a monthly basis. 80 percent of cellphone users overpay on their plans by $200 per year, according to a recent article by ABC News. Similarly, no one watches all the channels associated with their pricey cable subscriptions, making online streaming and lower-cost alternatives, like Netflix and Redbox, a smarter option.
6. Collecting Gift Cards
How many gift cards do you have in your wallet right now? Whether you’ve forgotten about them or aren’t interested in spending them, hoarding gift cards is something we’ve all done. Since GiftCardGranny.com lets you exchange gift cards for cash, it’s foolish to have them collect dust in your wallet.
7. Refusing Free Money
Free money is a rare gift and yet some of us are guilty of refusing it. If your company offers to match 401k contributions but you haven’t yet set up an account, you’re leaving money on the table. Saving for retirement should be a priority, and a company matching program is the perfect incentive to get you started.
8. Paying Overdraft Fees
Overdrafting your account is inexcusable since you can easily check your balance online or on your smartphone. Further, overdraft protection is available in many forms, including tying your checking to your savings account or requesting your card be denied if sufficient funds are unavailable.
9. Neglecting Autopay Accounts
Autopay is a beautiful thing, helping us to pay our bills on time and avoid late fees. However, setting up the service and promptly ignoring it is a foolish move indeed. Banks and service providers make mistakes all the time and it’s up to you to catch them when they occur. You may be paying for unwanted services or additions to your bill without even knowing it.
10. Hoarding Cash
Budgeting and paying down debt are complicated enough, but even saving money can be done improperly. Forgetting where you put that twenty-dollar bill or priding yourself in your change collection represent foolish ways to save. These funds should be invested or at the very least put into an interest-earning savings account.
11. Avoiding Rewards
Given the number of credit cards out there, using one without rewards is pretty senseless. Whether it’s cash, gift cards or travel points you seek, you can find a card that specializes in one or all of these perks to help you get the most from your spending. Use CreditCards.com to compare reward cards and find what works best for you. Ultimately, being rewarded for planned purchases makes sticking to a budget bearable.
12. Buying Free Products or Services
Paying for something you can get for free may be one of the most foolish moves out there. However, some of us fork over cash without realizing we can get that item or service for free. For example, you can plan your family dining experience around restaurants that offer free kids’ meals on select days. Paying for texting or ATM fees is unnecessary with apps like ATM Hunter and Textfree. Even operating systems and word processing programs are free with Ubuntu and Google Drive.