What NOT to Do With Your Money

Sometimes it can be helpful to be told what not to do with your money rather than being told what you should be doing. That’s what we are going to take a look at today. Knowing what not to do can save you from costly mistakes or financial crisis. I’ve provided a list of a few of the big things you’ll want to stay away from doing with your money.

Never shop when you’re feeling down

A little retail therapy never hurt anyone, right? Well, it doesn’t really help your finances. Shopping while emotional will only lead to unnecessary spending. Also, shopping when you’re feeling under the weather makes you more susceptible to pushy salespeople. Their flattery might make you feel better, but give too much into that and you may end up making a purchase you can’t afford. Their goal is to get you to spend as much money as possible, don’t allow their hollow compliments to sway you.

Forgoing a budget

If you don’t have some kind of budget in place, you’re asking for trouble. Without a budget how are you supposed to keep track of your spending? Your budget doesn’t need to be overly involved to be effective. A simple budget that puts a cap on spending in all major areas will go a long way. A budget will keep you accountable to yourself and your wallet.

Having an inadequate emergency fund

It is a huge mistake to have an inadequate emergency fund. Ask yourself these questions:

Do you have six months of your salary saved?
Is that money separate from your regular savings?

If you’re jaw just dropped at the idea of having six months worth of your salary saved, pick it up and I’ll explain why it’s important. An emergency fund if for, you guessed it – emergencies. Things like losing your job, expensive car repairs, or unexpected medical bills. These things generally tend to cost a lot and can be detrimental to your finances.

If you answered yes to the first question, but not the second, you’re not out of the woods yet. Your emergency fund needs to be a separate account from your checking and regular saving accounts. The reason for this is because you should treat it differently than your ordinary savings. That money is for vacations, gifts, and any other “wants” you have. You should not be dipping into your emergency funds for a guys weekend away.

Don’t lend money to people you can’t trust

It will be very tempting to help out those in need – especially family and friends. If you are going to lend money out, make sure you can trust them. An untrustworthy person will have no problem asking for a loan with zero intention of paying it back.

A little bonus on this topic: Even if you can trust the person who’s asking for a loan, make sure you can afford it. Loaning money you don’t actually have to loan out will be a hit to your finances.
Managing your money is no easy task, but hopefully knowing what not to do has given you a different perspective. Overall, setting guidelines for your money will shed light on what’s important and push aside the things that aren’t.