21 things you should never do with your money

There are probably hundreds of things you shouldn’t do with your money, but what are some of the biggest money mistakes you should avoid? To find out, GOBankingRates spoke to various financial experts. Read on to see the top things you should never do with your money.

1. Never Cash Your Paycheck Right Away

If you cash your paycheck right away, you might burn through it too quickly.

“You will most certainly spend it all” if you cash your paycheck rather than have your employer directly deposit it into your bank account, said Barbara Friedberg, a financial expert.”Even better is to automatically transfer a percent of your paycheck into a retirement investment account and direct-deposit the remainder into a bank account.”

One advantage of having a workplace retirement plan, such as a 401k, is that money is automatically deducted from your pay and invested. You don’t see it, so you won’t spend it.

2. Never Fall For ‘Special’ Finance Deals You Can’t Afford

Promotional finance offers that provide zero or low interest rates on a big purchase might sound like a great deal — until you wind up paying more than you expected. That’s what happened to Grayson Bell of DebtRoundUp.com.

“Don’t finance a new vehicle, or watercraft in my case, based on the low promotional monthly payment,” he said. “I financed a new $10,000 Jet Ski with no money down and no real way to pay for it based on a radio ad promoting a super low $69 per month payment. What I didn’t read was the rate was only for two years, then it changes to include retroactive interest based on the loan amount.”

“Those financing deals can ruin you if you’re only looking at the monthly payment,” he continued. “Go through the math, and read all of the fine print. They get you in with the low monthly payments, but keep you paying for much longer than you anticipated.”

3. Never Co-Sign a Loan You Can’t Afford

Michelle Schroeder-Gardener of MakingSenseofCents.com said you should never co-sign on a loan for someone unless you have the means to pay it back fully.

“The fact is that you never know if the person will be able to pay every single payment, so it’s best to prepare yourself,” she said.

4. Never Live Above Your Means

One of the tenets of building wealth is to live below your means. Saving and investing should be your priorities so you can help pay for you children’s college costs and live comparably in retirement, said Cathy Curtis, a fee-only financial advisor.

5. Never Rely Only on Cash When Traveling

Sure, carrying and using cash is a good alternative to running up credit card bills. But, Curtis suggested using travelers checks or credit cards as an alternative to cash.

Holding substantial cash when you’re traveling can invite unfortunate situations. You could lose it, or you could be a victim of theft, which is not uncommon in high-tourist areas.

6. Never Give Away Money Over the Phone

Phone solicitations often involve raising money for legitimate organizations. Unfortunately, they’re also an easy way for con artists to scam well-meaning donors.

Never give out your credit card number over the phone in that situation, said Curtis. Instead, ask the solicitor to mail you the information. This way, you can research the organization if you are unfamiliar with it and make sure it’s legitimate.

7. Never Shop When You’re Emotional

It’s best to avoid shopping when you’re feeling down because you might be tempted to spend more in order to feel better.

Another situation to avoid is pushy salespeople; don’t let them flatter you into buying something you can’t afford. You might need some positive reinforcement, but getting it from a clerk whose interest is in making a sale might cost you.

There are other ways to feel good about yourself without shelling out cash. Make decisions based on your need and your budget, Curtis said.

8. Never Opt Out of Your 401k

Opting out of your 401k plan is one of the worst money moves you could make, said Esther Kim of ForUsAll, a low-cost 401k plan provider for small businesses.

Many companies use automatic enrollment as a default for employees who don’t make an election to participate in the 401k plan. Make sure you choose to enroll in the plan, and increase the amount you contribute above the auto-enrollment amount. Then, sign up for your plan’s automatic escalation feature, which will increase your contribution percentage by an amount you specify each year.

9. Never Hire a Financial Advisor You Can’t Trust

Choosing a financial advisor can be the most important decision you make. It can also mean the difference between building wealth for retirement or becoming a victim of fraud or paying excessive fees.

“Never invest your money with someone you don’t trust, even if you can’t pinpoint the source of the mistrust,” said Julie Rains of InvestingtoThrive.com.

Get recommendations for advisors from relatives and friends you trust. Research their designations and background at the Securities and Exchange Commission website or on the Financial Industry Regulatory Authority site.

10. Never Put All Your Money in Only Illiquid Investments

“There are many investment products available that will lock up your money, limiting your access,” said Daniel Zajac, a certified financial planner at Simone Zajac Wealth Management Group. “You should be keenly aware of when and how you can get to your money, even more so if you make the decision to put a large portion of you assets in something that restricts access.”

For example, individual stocks, mutual funds and exchange-traded funds have a high degree of liquidity. By contrast, illiquid investments are those that cannot be sold quickly without incurring a significant loss in value. Examples include non-traded real estate investment trusts, some collectibles and more.

11. Never Buy Up Too Much Company Stock

Owning company stock can be a valuable addition to your portfolio, said Zajac, but don’t put too much of your money in that investment. If your company experiences a downturn, you could lose your investment and your job in one fell swoop. A good rule of thumb is to limit your company stock exposure to 10 percent of your total net worth, he said.

12. Never Make Insurance Your Only Investment

“Insurance as an investment is rarely, if ever, a good idea,” said Zajac. “It’s an especially bad idea for those just getting started. Your focus should be on creating an emergency fund, creating liquidity and contributing to your retirement. Focus on buying term and investing the difference.”

Cash-value life insurance is often pitched as a retirement savings vehicle to high-earning business owners and professionals. While this might be a viable solution in some cases, it is generally a better idea for these folks to take advantage of more traditional retirement vehicles such as a 401k, he said.

13. Never Be Unintentional With Your Money

“You have to pay attention to your money and your budget,” said financial coach Melissa Thomas. “Savings accounts need to be labeled for their intended purpose.”

For example, you might have a separate account for your emergency fund and another to save for the holidays. Accounts earmarked for long-term goals like retirement or college should be kept separate and never be mingled with the shorter-term goals.

14. Never Buy a House Without Looking at the Full Cost

“People tend to only look at the payment amount and not consider the other costs that come with home ownership, such as needed repairs and ongoing maintenance, differing utility bills than their previous place and possible tax increases,” said Josh Elledge of SavingsAngel.com.

“Make sure that you factor in those costs above the monthly mortgage payments,” he continued. “Otherwise, one especially hot summer or a minor accident backing out of the garage, and you’re piling up additional debt on a credit card to get by.”

15. Never Sign a Contract You Don’t Understand

“You can commit yourself financially for a very long time, and at a very high cost, by signing a contract you don’t understand,” said Elledge. “If you don’t understand what you’re committing to, don’t sign.”

It’s a good idea to have an attorney review any contract you’re considering. And the excuse of wanting your lawyer to review the agreement is always a good way to escape a high-pressure pitch to sign something.

16. Never Loan Money to Friends and Family You Can’t Trust

“It is hard to say ‘no’ to friends and family who ask to ‘borrow’ money, but there is very little upside to doing this,” said Kirk Chisholm, a wealth manager with Innovative Advisory Group. “Sure, you might get your money back, but do you really want to pester them to get it? The bigger question is, what if they don’t pay you back? Are you OK with saying goodbye to that money?”

Think long and hard before you give your money away to a friend or family member. Otherwise, in the event that you don’t get your money back, your relationship with them might suffer.

17. Never Spend Money on Things You Don’t Really Use

“It’s mind-boggling the amount of money people waste on things they neither need nor use,” said Elledge. “Whether it’s buying a fancy phone they have no idea how to use, buying an extended warranty on a product that already comes with a warranty, or even purchasing groceries they forgot are sitting in the cupboard at home, it’s wasteful spending.”

Instead, Elledge suggested you should stick to buying items you actually need and use on a daily basis, and “you may find a lot more money in your monthly budget.”

18. Never Invest Money You Can’t Afford to Lose

“Every investment carries a level of risk, and you should be prepared to face the worst-case scenario every time,” said Pauline Paquin, personal finance expert and founder of ReachFinancialIndependence.com. “Do not invest money that would compromise your financial well-being if you lost it … One financial mistake can be devastating.”

19. Never Buy an Investment That Sounds Too Good to Be True

“You should never purchase an investment you do not understand or sounds too good be true,” said Joseph Carbone, a certified financial planner with Focus Planning Group. “If it sounds boring, then it’s probably a good investment.”

Often times, those too-good-to-be-true investments are expensive and illiquid, he said. Staple investments — such as stocks, bonds and certificates of deposit — might be better performers.

20. Never Get Carried Away on Deals Websites

“Deal websites like Groupon can be a great way to save money — as long as you don’t become addicted,” said Sean Cooper, financial expert and author of the upcoming book “Burn Your Mortgage: A Simple, Powerful Path to Financial Freedom.” “Similar to coupons, deal websites can lead to overspending on stuff you may not need … To avoid the temptation to spend, only visit deal websites for stuff you’re already planning to buy.”

Just like with a brick-and-mortar discount store, the prices can be addicting. But, you might spend more than you can afford — and end up with a bunch of stuff you really don’t need.

21. Never Buy a New Car — If You Can Help It

“Don’t ever, ever, ever buy a brand new car; buy pre-owned instead,” Elledge insisted. “Car dealers try to lure buyers into buying new with low monthly payments that take years to pay off. You’ll never be able to achieve financial freedom from debt if you always have a car payment.”

Before buying a new car — or making any type of large purchase — always assess your finances and ask yourself: Can I really afford it? If not, do comparison shopping, and see if a used car is better for your budget.

From GoBankingRates.com: 21 things you should never do with your money

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