Money: The difference between right and wrong

People do not always use their money wisely, some of it is easier to see than others. There is a grey area of what are the right and wrong things to do with your money. Of course, these things all depend on where you are in life and how much (or little) money you have. The list below documents some of the more applicable guides of how to handle your money.

Gifting money

There is nothing wrong with helping out people in need, especially deserving family members. It really all comes down to where you stand financially. People run into trouble when they gift more money than they can afford, if they can afford it at all. If you can cover all past, present, and future expenses and then have some expendable money, by all means help. The real issue is if you do not have it. If gifting money to a loved one will help them, but puts you in financial trouble, nobody wins.

Saying yes…to everything

There is nothing wrong with doing fun things, but where the problems come up is when you can’t say no. You won’t be able to afford going out every weekend and you won’t be able to afford big trips all the time. Saying no to save your wallet is a good skill to learn. Plus, you will eventually get really good at picking the most exciting and fun things to do.

Withdrawing from retirement accounts too early

Retirement accounts are supposed to be reserved for, wait for it, retirement! If you are withdrawing from a 401(k) or an IRA before 59 and a half, you are quite literally short changing yourself. Any withdrawals that are not for qualified reasons are subject to tax and a 10% penalty. Do yourself a favor and leave this money alone.

There are a few exceptions to the rules, but be careful when doing so. You can dip into this money early for purchasing your first home, if you become disabled, or to fund education, but make sure you look into other options before dipping into your retirement – your older, wiser self with thank you.

Credit Cards

Credit cards are a great thing to have and great credit is even better. You can’t have one without the other, so be smart. Credit card debt weighs a lot of people down and is an unnecessary expense that adds up rather quickly. Having these cards around for emergencies or paying bills is a great thing, as long as you can pay off the debt rather quickly.

Managing your money can be tough, especially when it is tied to literally everything you do. It’s important to realize where you fall short and try to clean up your finances before you get yourself into too much trouble. Spending some time learning about what is good for you financially and what is not can save you a world of worry