When it comes to finances, you figure you're pretty sharp.
You know how to comparison shop and you contribute regularly to your 401(k) plan.
But there are common mistakes that even money-savvy people can make.
If you've ever let your spouse control the finances, or you've put off examining your credit report or bought something frivolous just because you had a coupon, read on to find out how to banish cash conundrums from your life for good.
Money mistake No. 1: Minding the pennies and missing dollars.
Have you ever driven across town because you wanted to cash in a 50-cent coupon? Do you spend a lot of time searching out bargains and clipping coupons? "It's sweating the small stuff," says Ginita Wall, founder of the Women's Institute for Financial Education and a financial adviser in San Diego. "You're concentrating so much on clipping coupons and getting bargains, you're forgetting what your overall goals are. Then you'll take the money you saved and just spend it on something else."
Also, being pennywise can sometimes cost you more money than you save. For example, you may spend more in gas than you save from the coupon if you have to drive across town to redeem it.
Smart cents solution: Think of your goal.
It's fine to save cents by clipping coupons and shopping around for bargains, but be sure to keep your bigger goal in mind. Why are you saving the money? Is it for your kid's college education, your vacation fund, a new car? Then take the money you save and put it where it will do the best. For example, many grocery stores have banks inside. If you save $7 with coupons, walk over to the bank right then and deposit that $7 into your savings account.
Money mistake No. 2: Being confused by credit reports.
Whenever you seek credit, whether it's a new store card, a car loan or a mortgage, the lender checks your credit report to determine your creditworthiness.
"Credit reports are the most important decision-making tool for creditors," says Catherine Williams, vice president of financial literacy for Money Management International. Even potential employers and landlords can request your report to find out if you'll be a responsible employee or tenant. That's why mistakes on your credit report, whether they're caused by the credit agency or are the result of identity theft or fraud, can make your life miserable.
Smart cents Solution: Check your report.
"Everybody owes it to themselves to get a copy of their credit report, and you should know that the 2003 FACTA (Fair and Accurate Credit Transaction Act) (had) a provision to allow consumers one free copy every year from each of the three major credit bureaus -- Equifax, Experian and TransUnion," says Williams.
You should request a copy of your credit report every year and before making any major purchase. The Web site annualcreditreport.com, sponsored by the three major credit reporting agencies, serves as a centralized, authorized source for consumers to request free credit reports from all three sources. When you request reports there, you can also choose to pay to receive a copy of your credit score.
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Each agency differs slightly in the information it carries, so it's a good idea to check all three reports. Also, the reports should come with supporting information on how to read the data and dispute mistakes.
The three bureaus are TransUnion, Equifax and Experian. You can also request credit reports directly from the agencies, usually for a fee, and dispute your credit report's errors.
Money mistake No. 3: Letting budgeting get you down.
Feeling guilty that you don't have a budget? You're not alone. Many people find budgeting such a drag that they just don't do it, says Wall.
Smart cents solution: Do 'spot budgeting.'
Don't feel that you have to budget down to the last penny. If budgeting is a burden, you can do "spot budgeting" instead, says Wall. "Pick three or four categories where you think you can trim expenses -- such as clothes and entertainment -- and cut down on those. You don't need to worry about every expense."