{"id":6140,"date":"2013-04-03T14:06:25","date_gmt":"2013-04-03T21:06:25","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=6140"},"modified":"2016-12-21T07:30:41","modified_gmt":"2016-12-21T15:30:41","slug":"five-ways-you-sabotage-your-savings","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/five-ways-you-sabotage-your-savings\/","title":{"rendered":"Five Ways You Sabotage Your Savings"},"content":{"rendered":"

Do you sabotage your savings? “Save more” is a bit like telling people to lose weight. It’s obvious advice, usually welcomed with nodding and guilty smiles. You know it. I know it. We all know saving should be part of our lives.<\/p>\n

Getting started, even in a small way, can breed the confidence to do more. Saving, like eating well, is habit-forming.<\/p>\n

Sometimes, though, you sabotage your savings plans. Here are five ways you might sabotage your own savings at some point in life:<\/p>\n

1. Failing to sign up for a 401(k) plan at work:<\/strong>\u00a0It’s hard to sit through those human resources slideshows, we know. There’s always an important deadline or other meeting to attend. But missing out on your 401(k) is giving up on the best tax break an employee will get short of having kids and buying a home. Increasingly, companies automatically enroll their workers at 3% of salary.\u00a0You should up that immediately to 10%<\/a>. Money out of sight is out of mind.<\/p>\n

\"sabotage<\/a><\/p>\n

2. Putting off basic planning:<\/strong>\u00a0Do you know\u00a0how much money you will need in retirement<\/a>? Are you scared to think about it? Here’s a simple yardstick. Financial advisors tell folks to plan on anywhere from 15 times to 25 times their maximum salary. You can figure this out in 10 minutes. Go to Salary.com or a similar website and figure out what the 90th percentile annual pay for your career path will be. Multiply that dollar figure by a number between 15 and 25 (your choice) and there’s your “number.” Just knowing it should be motivating.<\/p>\n

3. Blowing windfalls:<\/strong>\u00a0Tax prep companies love to advertise around the idea that your tax refund is a gift from above. It’s not. It’s money you loaned to the government interest-free all year. Either adjust your withholding to keep that money \u2014 and dump it into your 401(k) instead \u2014 or, if you like the automated “saving” aspect of a tax refund,\u00a0immediately put it into your short-term emergency kitty or a tax-free Roth IRA<\/a>.\u00a0Whatever you do, stop spending windfalls.<\/p>\n

4. Paying too much for money management:<\/strong>\u00a0Once you get a head of steam going on saving, then you have to figure out how to make that money grow safely and not sabotage your savings. There are plenty of folks out there who would like to help you achieve that, and nearly all of them charge far too much for what they provide. If you are\u00a0stuck in an expensive 401(k)<\/a>, make some noise at work about it. If you save in IRAs, look for passive investments such as exchange-traded funds (ETFs) and index funds. The math is simple:\u00a0Expensive management will cost you a third of your investment return<\/a>. It’s just unnecessarily costly.<\/p>\n

5. Robbing your retirement to finance college:<\/strong>\u00a0This is a huge temptation that can sabotage your savings\u00a0late in the game. You have done your work diligently over the years, built up a decent nest egg, maybe even paid off your home and cars.\u00a0Retirement\u00a0is in your sights. Then junior wants to go to an expensive private university or your little girl gets into dental school. You love your kids. That’s great. But they can borrow to pay for school.\u00a0You cannot borrow to fund your retirement<\/a>. Blow it now and you will not get another shot, no matter how high the market goes up. Be very careful.<\/p>\n","protected":false},"excerpt":{"rendered":"

Do you sabotage your savings? “Save more” is a bit like telling people to lose weight. It’s obvious advice, usually welcomed with nodding and guilty smiles. You know it. I … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":6153,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[47],"tags":[],"yoast_head":"\nFive Ways You Sabotage Your Savings | MarketRiders.com<\/title>\n<meta name=\"description\" content=\"Sometimes you sabotage your savings plans. 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