Sure, it’s important to know what it means to put your money in either a 401k vs ira, after all, it’s your financial future that you’re talking about, what makes the most sense for you to maximize your potential income for when you do finally leave work for good, but it’s the choices you make today that could also make an impact. By freeing up extra money from what you’re currently wasting, you can continue to give yourself a cushion by building up an emergency fund, paying off debt, and increasing retirement contributions every year.
Paying Credit Card Interest
Credit cards will allow you to charge as much as you want throughout the month, provided you are short of your credit limit, so it’s on you to be a responsible borrower and knowing what you can afford to pay back. If you are unable to pay the full statement balance by the due date you will begin paying credit card interest, which depending on the balance and interest, could cost you hundreds of dollars a month, really throwing your budget out of whack and setting you behind.
Missing Out on Free Money
On the other hand, if you are able to keep spending until control on what you can afford, then using a rewards credit card is a great way to earn points and cashback on the purchases you were going to make anyways. Free money is hard to pass up, provided you know it’s there. At work, check to see that you are taking advantage of any employer-matching retirement contributions, as you could be missing out on thousands of dollars a year which could add up to tens of thousands, if not more, over the next few decades until you retire.
Not Checking Your Credit Report
With so much fraud going on these days, it’s getting hard to protect yourself, especially considering your card information can be stolen at the gas pump, if you leave your card out while paying a bill, or having a store customer information be compromised, even credit bureaus are not safe anymore, making it all more important to check your credit report at least once a year, and then each month you can look at your credit card statements to see the score to make sure you’re still trending in the right direction so that when you do apply for a loan, you can be sure you get the best interest rate on the market and save the most money over time.
Spending Too Much on Food
Going out to eat and not cooking at home is great, but that adds up pretty quickly. If you can meal prep for the week, including breakfast, lunch, dinner, snacks, by going grocery shopping, you can see the savings add up pretty quickly. You may not be much of a cook now, but once you see money continue to add up in your bank account, not to mention the pounds coming off due to healthier options, you may adjust to this new way of live better than you think.