Knowing the difference between 401k vs ira is important when selecting the right option for investing for the future, based on your financial situation, but it’s your day to day money behaviors that can have an effect not only today, holding you back from getting ahead by going into debt, but affecting your future by not saving to build your nest egg for when you do finally decide to retire down the road. By breaking bad habits now, you can secure your financial future.
Ignoring Your Credit Report
You just never know who, when, and how your credit information can be accessed, whether it’s stealing your card information or hacking into a store’s system, you may not be as safe as you once were, in fact, credit bureaus are now being compromised! If you can pull a free copy of your credit report at least once a year from the major bureaus, you can ensure all of your accounts are up to date and accurate, so you can continue to see your credit score rise so you’re able to take advantage of the best interest rates on the market.
Not Tracking Expenses
If you were asked how much your monthly bill are, or what you spend in groceries, or gas, would you be able to say? A lot of time we just spend and not look back, which doesn’t really bode well for the future, putting yourself in risk of debt. If you are able to pull the credit or debit card statement from the previous month, and each month going forward, you can keep an eye on every purchase, hopefully opening your eyes in places where you could probably cut, naming those purchases as “unnecessary”, and watching the savings add up.
Paying Credit Card Interest
Probably the only negative about a credit card is that, yes, you do have to watch out and stay disciplined, otherwise if you spend too much and are not able to pay the full statement balance by the due date, interest will kick in and you can look forward to payments that mostly go towards interest, unless you’re able to make huge payments until the balance is gone. There’s nothing worse than seeing your hard-earned money wasted away on interest, so avoid having the balance skyrocket, and continue to use credit cards for what they are good for: accepted anywhere, production from fraud by not cleaning out your bank account like you would a debit, and the best, rewards.
Missing Out on Free Money
If you do not have a rewards credit card where you can earn points or dollars back on the purchases you would be making anyways, you’re missing out. Also, when it comes to saving for the future, take a look at work to see if there are company-matching 401(k) contributions to ensure that you are maximizing their free contributions, as that would be a huge mistake on your part by not contributing at least to the max of what they’re willing to match.