Five Big Don'ts For The New Year

One thing that is a constant on personal finance sites, TV and radio shows and blogs is that there are always experts who will tell you what you should do, but not necessarily what you shouldn't do. When I was growing up, I wish that one of my parents would have been financially savvy enough to pass along some personal finance "don'ts" that I had to learn myself the hard way. Hopefully, I will help save you a lot of time, trouble and effort by passing along these "don'ts" all of which have personally cost me a lot of money at some point or other in my life.

1. Don't spend more than you earn. That seems like a no-brainer, right? But, people spend more than they earn all the time. Anytime you buy something with a credit card and then don't pay off the balance right away, you are spending money you don't yet have. Whenever you purchase something spontaneously, even if you don't have the money for it, you are spending more than you earn. This is the number one thing that gets people into financial trouble. This is why there is so much credit card debt in the U.S. I used to spend more than I earned, and it led to nothing but misery.

2. Don't base your investments on the "in" thing. Remember when dot-coms were really hot, and then real estate? You know the old saying, "what goes up must come down". Both of these hot investment areas eventually went bust. The best investments are usually the boring ones: stocks from good companies that have a history of steady growth and dividend payments. Find a good index fund, put your money in it, and "set it and forget it". I used to follow hot stock tips. Now, I buy stocks in companies whose products I personally use or whose business I understand well.

3. Don't forget to save. It's easy to spend money, but harder to save it. If you have nothing in a savings account, now is the time to start. It doesn't matter what you save from each paycheck, but save SOMETHING. In fact, make it automatic. Set up an automatic deduction for savings. After awhile, you won't even miss it. I never used to save any cash at all. Now, I stick away a minimum of ten percent of my income each month.

4. Don't panic. Many economists are predicting things will get better with the U.S. economy before they get better. In fact, one recent report said that unemployment could hit 10 percent this year. It has been decades since we've seen unemployment numbers that high. It's possible you could be affected. Don't panic. Take pre-emptive steps now to make sure you'll be prepared in the future, in case the worst happens. Build your savings account, update your resume, expand your network or at least stay in touch with the people in your professional network, develop "side" businesses, explore freelance work, etc. Try to do at least one thing each week that will help strengthen your finances and career in the future.

I used to work in broadcasting, a volatile business, to say the least. There is no job security in broadcasting, but I never looked past the job I currently had at the time. Only when I started planning out my career and building my own personal professional network of contacts was I able to land on my feet and get another job when one went sour or disappeared.

5. Don't stop saving for retirement. It would be easy to bail on your 401k or other retirement plan. Don't. Whatever happens in the U.S. economy this year, you will still retire at some point in the future. For example, I'm still buying stocks, although at lower amounts. I am sticking more cash in high-yield savings accounts and I plan to buy CDs this year as well. However, I still need my money to grow, so my IRA will continue to get contributions.

I didn't start saving for retirement until I was in my 30's. If I had it to do over again, I would have started when I was 18, and never stopped. I probably could have retired by now, or at least been able to retire early.