There’s plenty of advice out there for what to do with your money, but it’s just as important to know what not to do with it. In today’s uncertain economy, avoiding common financial pitfalls can make a big difference.
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In a recent Instagram post, personal finance expert Humphrey Yang broke down the three things he never does with his money — that you shouldn’t either.
Lend It to Friends or Family
When a friend or family member asks to borrow money, you may feel a sense of obligation to do it — but Yang said to think twice before you get money involved in your relationship.
“This can get messy, awkward and strain your relationships,” he said.
Instead of lending someone close to you money, offer to give an amount you are comfortable with as a gift. For example, if a friend is asking to borrow $500, offer to give them $50 “and call it a day,” Yang said.
“Yes, it still sucks to part ways with your money, but at least you are helping your friend in need,” he said. “They may not love it, but it’s better than completely shutting them out.”
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Put It in Low-Interest Bank Accounts
Before putting your money in a savings or checking account, do some comparison shopping to see which bank offers the best interest rate. As Yang noted, this typically won’t be one of the major national bank chains.
“These big banks never pay any interest,” he said. “Move funds you don’t need to touch immediately to a high-yield account.”
Spend It on Depreciating Items
Yang said to think carefully before making any major purchase to determine if it’s really worth the cost.
“I would never spend [money] on something that depreciates rapidly without adding real value to my life,” he said. “I’m talking about things like expensive cars that lose 20% of their value the moment you drive them off the lot, designer items bought just for status or the latest gadgets that’ll be outdated in six months.”
Before making a big purchase, Yang recommended asking, “Will this genuinely improve my life or help me earn more money?” If not, you shouldn’t buy it.
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This article originally appeared on GOBankingRates.com: Never Do These 3 Things With Your Money, Says Personal Finance Pro Humphrey Yang
