5 Financial Mistakes to Avoid
Navigating your finances can be tricky business. Here are a few common money mistakes not to make.
Don't be afraid to ask questions, be critical and make sure that the financial advisor you are working with is communicating with you well.
With all of the conflicting advice out there, it's not always easy to know what steps you should take to ensure your money is well managed and working in your best interest. In other words, it's easy to make a mistake. So we invited the expertise of Patricia Mendez-Hall, pro financial planner, author, speaker and more, to help us determine the steps NOT to make.
These mistakes, while easy to make, can hurt you in the long run. Mendez-Hall has been in the business for 30 years and is currently developing financial workshops for divorced and widowed women. You can find out more about her at patriciahallbooks.com
Not paying yourself first
This mistake can take many forms – not setting aside enough savings or not anticipating how much petty cash you need. Make yourself a "debt" and allow yourself an amount of cash or funds as you would any other bill, she says. One of the challenges Latinas face is wanting to help family with every extra dollar at the expense of our own needs. Pay yourself first and then help your loved ones with what you have left. You need to make sure you are financially sound, especially if you are supporting other people. This includes preparing for the unexpected.
Not doing your research
There are products that you can put your money into that guarantee you a minimal rate of return. Plus, when you take out your money there are no taxes incurred. Do your homework to find out which of these products is best for your specific situation, and research products with several different providers and sources. Sometimes, if you go to a broker they may want to sell you solely their products because they pay the highest commission. I got tired of working for a bank that would tell me to sell one of their products when I knew there were more out there that would be better for the client, she says.
Avoiding the issue and not saving
When people are scared, they spend, says Mendez-Hall. It gives them an immediate satisfaction, and allows them to avoid thinking about their financial situation. Don't do this. Avoiding the issue and putting off saving is never good plan. Putting the blinders on only allows more time (and income) to pass without managing and saving it appropriately. Involve yourself immediately in your financial reality.
Not knowing your interest rates
When Mendez-Hall speaks to people, especially young people, about how to get rid of credit card debt many of them do not know their interest rate. They are simply making payments, and often the minimum payments. Knowing your interest rate, and any fees, is key to planning your pay off. If you are making small monthly payments to your credit card that are not greater than the amount of interest, then you aren't making moves to pay them off. When you get to the cash register at your favorite retailer, you have likely been asked if you want to save on your current purchase by signing up for their credit card. If you are going to save $10 on this purchase, but use a card with a 20 percent interest rate to pay for it, that's not a good move, she says. The signup bonus may not be worth the high monthly interest.
Being too timid
Don't be afraid to ask questions, be critical and make sure that the financial advisor you are working with is communicating with you well. If you are not comfortable talking to that financial advisor then take your business somewhere else. We are loyal people but we need to be loyal to ourselves first, she says.