Beware of making these money mistakes

Published on Apr 07, 2013

The top regret for many people is not saving enough money for their retirement, a recent survey of financial mistakes conducted in the United States showed.

"The biggest thing we found from almost all age brackets is folks are not saving enough for retirement," says Mr Scott Thoma, investment strategist for Edward Jones, according to a Fox Business report.

Here are ways to get finances back on track, Fox Business says.

Mistake No.1: Not tracking spending
Thirty-five per cent of survey respondents in the 18-to-34-year-old bracket cited not paying enough attention to their spending as their biggest money mistake.

Most people view each purchase in isolation as they go throughout their day, says Mr Thoma, not realising their purchases are adding up to a hefty tab.

To help get a better picture of your spending habits and identify any unnecessary spending, track every purchase for two weeks.

"If you were saving an extra US$100 a month, that could mean an extra US$100,000 for retirement," says Mr Thoma. "It's as simple as a cup of coffee a day."

Mistake No. 2: Carrying too much debt
While there are acceptable debts like a mortgage or car payment, many consumers are overspending on credit cards and carrying a balance and end up paying a lot more than they owe with high interest rates.

To get out from under that debt, Mr Thoma advises tracking spending and creating a budget that includes paying down debt - starting with the credit cards with the highest interest rate.

"If you are paying 18 per cent on a credit card, that's the first place that needs to be addressed because your are not earning an 18 per cent return on an investment," he explains.

Mistake No. 3: Bad investments
Everyone likes to think they are savvy investors, but most of us are too emotionally involved to be effective investors.

Mr Thoma says: "Whenever the market is up, they feel good, and whenever risk rises, they want to get out."

He advises people to avoid reacting to every market gyration.

"You can't let the outside environment dictate every single change you make," he says.