6 Dumb Mistakes to Avoid When Saving

No one said saving was easy but it must be done.

Feb 1, 2014 at 3:00PM


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No one said saving was easy — at least no one at MyBankTracker — but it must be done. It doesn't matter whether you're saving money to purchase a house, for an emergency fund, or to take a vacation next summer — you should be saving no matter what.

That said, it's important to save smartly. Protect yourself by avoiding these 6 dumb money savings mistakes:

1. NOT saving now 
No matter what you're saving for, it's imperative that you start saving immediately. Like yesterday. Don't make any more excuses. Just start saving. The longer you wait to save, the more regrets you will have down the road when it comes time to purchase a home or retire. Just think: How much money would you have earned today if you saved just 10 percent from your paycheck into, say, an IRA when you were in your 20s, earning compound interest on your investment?

2. NOT saving enough 
So you say you're saving 10 percent of your income? Well, have you gotten a raise or increased your earnings in the last few years? The amount you save should keep pace with your income. Maybe you can only afford to save a few bucks each week as you enter the working world, but as you experience job growth, remember to revisit what you're saving and increase the amount if you're taking home more.

3. NOT saving in the right way 
Are you saving money in a traditional savings account? Have you considered saving a portion of your income to a high-yield money market account or CDs? These investments can help you build your savings more quickly than a traditional savings account. Of course, be sure to check out the terms of these investments because they are generally more risky. But if you're saving for something like paying to send your kid to college, these investments might be worth looking into to help your money grow.

4. NOT saving in a diverse way 
Diversifying your investments will protect your money should the market tank. By spreading your investments around in a variety of stocks, bonds, and other securities you will lower the risk of losing your investments all at once. Sure, it's not exactly the most exciting way to invest, but it is safer than putting all your eggs in one basket.

5. NOT saving it all 
It might be tempting to dip into your various savings (or retirement) accounts when you need money. But think about how much money you'd have saved up had you left your savings intact. Don't dip into your savings accounts unless it is an absolute emergency situation and you've exhausted all your other options.You'll regret it otherwise.

6. NOT saving for a rainy day 
You've been told several times to save money in an emergency fund, yet you still haven't. What if you lost your job? What if your spouse passed away?Would you be OK financially? If you had saved a bit of your paycheck each month from when you first started working, you'd have quite the savings fund. The Great Recession proved that financial calamities can happen, so prepare your finances today for the unexpected turbulence you might experience in the future. It's recommended that you save at least 3-6 months' worth of living expenses in an emergency fund — and saving more is never a bad idea.

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This article originally appeared on MyBankTracker.com

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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