Financial Naivete

Today TaxMama hears from Oscar in Chicago who wants to know, “How can 20- and 30-somethings avoid financial foolishness and start building wealth early?”

Dear Oscar

Well, one common error is treating credit cards are like free money. You’ve got to pay those bills sooner or later – or you’ll pay many times the original purchase price in interest. One good tip to
avoid misusing credit cards? Put the card into a check register and enter all your purchases, just as you would a check – and keep a running balance, deducting payments. SEEING the total
may help you avoid a needless purchase.

Next, impulse purchase – you don’t really have to buy everything you see. You’re not going to use most of the stuff you buy anyway, so stop throwing money away.

Do you have to buy everything new? There are some wonderful values in thrift shops. Often the very thing you were about to buy. Someone else probably never even used their purchase. My friend recently bought some wonderful, new shoes for a few dollars, that normally sell for over $80 retail.

Get re-acquainted with libraries. Aside from books, you can borrow audio books, music CDs, film CDs or DVDs – and they have Internet access – free. Just some thoughts. What are yours?

And remember, you’ll find answers to lots of questions, about handling your finances and other tax information, free. Where? At TaxMama.com

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