Most common money mistakes

money

When financial advisors meet with new clients, they usually spend a long time interviewing them and asking about their current policies, accounts and attitudes toward money. Here are the top mistakes people make with their money as identified by financial planners.

Overpaying for home insurance

A recent survey by insurance provider ACE Private Risk Services found that 78% of insurance agents said homeowners are overpaying their house insurance. Get that premium down by paying the highest deductible you can tolerate.

Postponing life or health insurance

You’re young and healthy, why do you need to spend money on this stuff now? Because if you don’t, you’ll pay more for it later. Premiums for health and life insurance increase each year you don’t have coverage. Starting early can save you thousands of dollars.

Underestimating healthcare costs – especially as you get older

The latest estimates from Fidelity show that retired couple should budget close to $11,000 for out-of-pocket healthcare costs per year. This number increases every few years. Increase contributions to 401k or other savings plans to cover these unexpected costs.

Ignoring tax break opportunities

Often small investors look at returns and not the tax implications of what their investments are doing. Look at which investments are taxable, tax deferred or tax free. Increase investments in accounts which expose you the least. Work with a broker on stock investments; selling stocks too early can result in tax exposure that could be avoided.

Paying late fees

They add up, and they impact your credit report. Coordinate your due dates so everything is paid at the same time and at a time when you have cash. Talk to creditors about removing late notice from your record. Some will do it.

Paying retail

With sites like Red Laser, PriceGrabber and Nextag, there is no reason to put up with full retail costs if you have a few minutes to do some online research. Over the course of a year, savings could run in the thousands for exactly the same products.

Not checking your credit score

Every four months, request a free credit report from one of the three credit rating agencies: Equifax, Experian or Transunion. Each is required to provide one free report per year. Check for any small reporting errors that are impacting your credit.

Source: CNBC.com

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The whole family dines together at a restaurant
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