There are a lot of things we do with our money thinking we are making good decisions at the time. However, some are actually not so great decisions and can be considered reckless. For example losing a lot of money at the poker table in Vegas. This is irresponsible and should have been thought out before sitting down at the table.
There are also of course the not so smart things you do with your money that are well thought out. You can avoid these things by reading and avoiding the 7 not so smart things you can do with your money, but you think it is smart at the time.
Taking Money From Your 401(k) Early To Buy A House Or Pay Off Debt
If you withdraw money from your 401(k) early you will have to pay heavy penalties. Don’t withdraw money until you reach the age of 59.5 years old. The penalties and loss of money is not worth the house you want. If you are in debt you can find another way to pay off your debt.
Taking Out A Ton Of Student Loans To Go To School
Unless you are going to become a doctor or going to a top notch business school, do not take out a huge student loan. You will regret taking out a huge student loan. After you graduate, rather than earning money you will be paying your student loans for a long time. Remember it is not just the loan you will be paying, but the interest that the loan is accumulating as well.
Not Getting A Credit Card
Make sure you get a credit card. Many people do not get a credit card because they are worried about missing payments and over spending. You do not have to worry about defaulting and getting into debt if you are responsible with paying off your card monthly. By getting a credit card you can build your line of credit. This line of credit will help you in many parts of your life in the future.
Being Conservative With Your Investments In Your 20’s
Your 20’s is a time to be adventurous and a bit reckless with your investments. You probably don’t have much responsibility. You are probably not married, not a home owner, and you don’t have kids; so this is the time you should be adventurous with your investments. Take chances in investment opportunities. Who knows it could pay off really well later on in life.
Paying Someone To Actively Manage Your Investments
You can hire a financial planner to help guide you with your investments, but do not pay someone to actively manage your investments. You should take full responsibility of your investments and manage them yourself. This way you will know what is going on. Who knows the person you hire may not be have your total best interest or may advise on things that don’t optimize your money earning potential.
Buying A House Because It Seems Like A ‘Good Investment’
Buying a house just because you think it is a good investment is a bad idea. Home ownership is not something you should take lightly. There is a lot of upkeep and responsibility attached to it. Make sure you do your homework before you make such a large purchase and make sure you know what the responsibilities are. Also, make sure that the home your are buying is actually a good investment.
Keeping All Of Your Money In A Traditional Savings Account
By keeping all of your money in a traditional savings account you are not making the optimal amount of money off of interest. With investing in stocks or bonds your money can be making more money. Also, there are a number of bank accounts that can earn you a better interest rate.
There are lots of things that may seem smart at the time when deciding what to do with your money. Take a bit of time to consider the consequences and if it truly is a good idea.