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  personal wealth health

The Biggest Financial Mistakes

These blunders could cost you

WILLIAM J. LYNOTT

The world of personal finance has become so complex that failing to keep up can threaten your financial health, regardless of your success.

Here are seven money mistakes you don’t want to make.

1 Keeping money in a bank savings account

Today’s interest rates on investment vehicles are abysmal, and one of the lowest is the savings account. That’s why you should never put your money in one. If you do, the paltry interest rate you’ll get will be below the inflation rate.

Instead, put whatever cash you need to keep available into a bank money market account — investigate minimum balance — (or a high-interest savings account) where you’ll get a better interest rate. Also, many have free check-writing privileges.

2 Failing to take advantage of online money transfers

If there is a place that will pay you less interest than a bank savings account, it’s your checking account. That’s another reason to open a bank money market account linked to your checking account. From then on, make all deposits into the higher-interest account. Then, transfer money into the checking account only as needed to cover the checks you write.

3 Assuming your bank will give you the best rates

Always ask to review all current interest rates for CDs, including any promotional rates that might be available. Banks often run specials offering interest rates higher than their regular rates. You can be certain that you won’t get that rate for an automatic renewal unless you ask.

4 Being in a hurry to pay your bills

Hanging on to cash as long as possible keeps that money available to draw interest. That’s why it’s important to set up a system to pay your bills just before are due. But be sure to pay them on time to avoid oppressive penalties from card issuers or marks on your credit score.

5 Failing to shop around for a better interest rate

Whether you’re paying interest or receiving it, it’s important to shop around. Bank deregulation has produced a competitive environment of wildly differing interest rates and charges. If you find a better deal than your present bank offers, take it. Don’t stick with a bank that isn’t competitive.

6 Overdrawing your checking account

Many banks charge big penalties for small errors. Some process checks not in the order received, but rather in the order of size. So, be sure to balance your checkbook after each transaction, and don’t write a check before the money is available in your account.

7 Not using software to help manage cash flow

Off-the-shelf computers programs are great resources to manage your finances, including personal investments. The financial reports and analyses they can produce can help you to gain a maximum advantage in your personal finances. OM

Information in this article is provided for educational and reference purposes only. It is not intended to provide specific advice or individual recommendations. Consult an accountant or tax advisor for advice regarding your particular situation.

MR. LYNOTT IS A FREELANCE WRITER WHO SPECIALIZES IN BUSINESS MANAGEMENT AS WELL AS PERSONAL AND BUSINESS FINANCE. VISIT WWW.BLYNOTT.COM, OR SEND COMMENTS TO OPTOMETRICMANAGEMENT@GMAIL.COM.