Top 5 Money Mistakes Everyone Makes
Another strategy is to save any windfalls you receive throughout the year, such as a tax refund or cash gifts for birthdays and holidays. Instead of spending that money or throwing it away in the trash, consider transferring it directly to your emergency savings account.
You can also make saving money a
habit by adding money to your emergency fund any time you make a purchase
that's not absolutely necessary. For example, choose the less-expensive menu
option at a restaurant or take public transportation to work instead of taking
a cab and add that money to your emergency savings.
By changing the way you think
about spending and saving, you can create a positive habit that will help you
tackle even the largest financial challenges. Finance shortcuts aren't magic,
but they can help you get ahead of your finances and feel more confident about
the future.
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Diversify Your Investments
The old saying, "Don't put
all your eggs in one basket," is wise advice for any investor. The
practice of spreading out your investment dollars among different investments
is known as diversification, and it's a great way to reduce the risk of big
losses while maintaining the potential for big gains. It's important to
diversify not only between asset categories (stocks, bonds and cash
equivalents), but also within each category. For example, it's not enough to
diversify your stocks by investing in small, medium and large companies; you
should also add investments in industries and sectors that aren't related to
one another. Similarly, a bond portfolio should include investments from
multiple issuers (federal, state and local governments as well as corporations),
with different terms and credit ratings.
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Your payment history includes the
track record of your timely repayment of debt on credit cards, retail accounts,
installment loans (such as automobile or student loans) and finance company
accounts. This component makes up about 30% of your credit score. Consistently
making payments on time helps your credit history and increases your score. In
contrast, late payments will negatively impact your score and may make it
difficult to obtain a personal loan.
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