Psychology of Money

14 Things You Can Do To Protect Your Money

Scammers aren’t the only risk to your money. It might be in danger from things you’ve never thought of. But we’ve thought of them, so you don’t have to. These are 14 things you can do to protect your money.

It’s Not Just Criminals

When you think about how to protect your money, you typically think of scammers and criminals stealing passwords or skimming your debit card number at the gas pump. And while those things certainly happen, they don’t represent the only danger your money faces.

There are many other ways you can lose money, but there are steps you can take to make sure it doesn’t happen to you.

1. Invest It

Some people think their money is safer in a checking or savings account than it is invested in the stock market. And you can understand why. The Great Depression, Black Monday, the 2007/8 Great Recession. If you’ve read about or lived through events like those, the stock market can indeed seem like the last place you should put your money.

But your money is at risk in a checking or savings account too. The reason? Inflation. Those accounts pay a very low interest rate, usually less than 1% although you can find some online banks that pay a little more than that. The average rate of inflation is about 3% so if your money isn’t earning more than that; it’s losing value.

Long-term, you can expect to make an average return of 7% in the stock market. Sometimes it will be less than that and sometimes more but that’s okay because investing is something you do for the long term.

If you’re afraid to invest because you don’t know anything about it, Acorns makes it easy. You just answer a few basic questions that will help determine the best asset allocation for you, and you’re off!

2. Avoid Outrageous Fees

I think most of us are aware of avoiding things like bank fees, late fees, and ATM fees and while you should always avoid them, annoying as they are, in the grand scheme of things, they aren’t the ones that will do the most damage to your money.

The fees that really bite are investing fees. How much are you paying in investing fees? You might not even know. Or you might be paying 1%, and that’s nothing right? But 1% over time is a tremendous amount of money; it could cost you nearly $600,000 over a forty year period. 

If you don’t know how much you’re paying in fees, you can set up an account with Personal Capital and use the Fee Analyzer to find out. It’s free to make an account and free to use the Fee Analyzer tool. If you only do one thing on this list, make it this one.

3. Use Credit Cards

If you’ve had credit card debt in the past, you might hesitate ever to use them again once you’ve gotten that debt paid off. And while using credit cards irresponsibly can certainly lead to financial disaster, credit cards themselves are not inherently dangerous. In fact, using credit cards rather than cash or a debit card is safer.

Credit cards come with some protections that can protect your money against things like fraud and can give you benefits like cash back on every dollar you spend, travel protections, and purchase protections. When you spend cash, you miss out on those protections and benefits.

4. Check Your Accounts

Setting up automatic payments for your bills can be great. It means you never miss or make a late payment and missing or paying a bill late can cost you money and hurt your credit score.

But you should still make it a habit to go through your bank and credit card statements each month. You might have been overcharged for something, or there may be fraudulent charges on your account.

If you’re a victim of fraud, you only have a certain amount of time to report it to your bank or credit card company in order to face no monetary responsibility for those charges.

5. Your EOB’s Too

An EOB is an explanation of benefits. If you see a doctor, dentist, or another kind of medical provider and use your insurance, you will get an EOB in the mail with the details of the visit.

These can be hard to read to a layperson, and many of us just toss them into a drawer or the trash without even opening them. But just as you check your bank and credit card statements, you need to check your insurance billing statements too.

Medical care is insanely expensive in the U.S., and that has given rise to a new kind of fraud. Rather than stealing your credit card number, thieves are stealing your insurance card number. If this happens to you, you could face thousands and thousands of dollars for medical care you didn’t receive.

If you’ve ever visited a new doctor and had to provide picture identification along with your insurance card, this is the reason.

6. Check Your Credit Report

Your credit report shows all of your credit accounts, including newly opened ones. You should check your report regularly to make sure no accounts have been opened under your Social Security number that wasn’t opened by you. You are entitled to one free report every year from each of the “big three” credit reporting agencies, Equifax, TransUnion, and Experian.

A lot can happen in twelve months though so the best strategy is to get a report from a different agency every four months. Each report is slightly different so it’s not a 100% foolproof strategy, but it will be good enough for most of us.

7. Shred It

You should shred every piece of mail or paper you no longer need if it contains things like your date of birth, Social Security number, account numbers, usernames, passwords, medical information, and pretty much any other personal information a thief or scammer might like to get their grubby paws on.

Once you put your trash on the curb, anyone can go through it legally. And people do because they know people throw away really sensitive information without a second thought. Don’t make it easy for these people.

If you have a shredder in your office, use that. If not, you can order one on Amazon for about $30. A very good investment!

8. Beware of Social Media

I’m amazed at the personal information some people post on their social media accounts. There was one memorable story where a woman posted a photo of herself holding a gift card, from Sephora maybe; I don’t remember. But when she tried to use the card, there was no money on it.

Can you guess what happened? Yep, someone saw her post, wrote down the account number of the gift card and used it to order stuff from the store online!

I think most of us are not that clueless, but you still need to be careful with your personal information. If someone can get your date of birth and your mother’s maiden name, two things that are not hard to find on these sites, they can do a lot of damage to you.

9. Look Out for Scams

There are countless scams out there at any given time, and we covered some common ones. Some of them seem so obvious that most of us would never fall for them but a really common one is to receive an email from your bank or credit card company that looks entirely legitimate.

The email tells you that there is a problem with your account and you need to provide your username and password so it can be resolved. No bank or credit card company requests this information from customers via email. These emails are phishing scams. Don’t even open them, just mark them as junk.

10. Use a Strong Password

I know it’s hard to keep track of dozens of different passwords but using MYNAME123 is not an option. If you can’t come up with a good one, you can use a generator to do it for you. Although because I’m paranoid, I would take that randomly generated password and change it a little! You can’t be too careful.

In addition to having a hard to crack password, use two-factor authentication. It means that there is an extra step to get into an online account after putting in your username and password. Usually, the step takes the form of a code you need to enter being texted to your phone.

If you’re dealing with an account over the phone, you may be required to provide a PIN that you set up when you opened the account. This extra step is kind of a pain, but it’s essential to use it for sensitive financial accounts.

11. Careful Where You Log In

Don’t access sensitive accounts from public computers or unsecured WiFi networks. If you need information about these accounts and are away from your home computer or laptop, call and get the information over the phone rather than logging in. Most banks and credit card companies allow you to get information about things like balances, recent charges, and payments from an automated voice system.

It’s not as convenient as logging into your account, but it’s safer.

12. Protect it from Yourself

Sometimes we are our own worst enemies, and that can especially be true when it comes to money. If money burns a hole in your pocket, there are some things you can do to protect your money from yourself.

Out of sight out of mind. Have part of your paycheck automatically sent to an account separate from your checking account. You can set up a direct transfer into a savings account, but money in a savings account isn’t really much harder to access than the money in a checking account so not the best option, but better than nothing.

Even better is to have some money sent to an investment account. You can set up auto transfers with investment services like Acorns and Betterment. It’s a little harder to get to that money. Transferring money from an investment account back into your checking account takes a few business days and if you tend to be an impulse buyer, those few days are often enough time for the impulse to pass.

But the best solution of all is to automatically transfer some money to a retirement account. If your employer offers a 401k, this is ideal. All you have to do is opt-in and choose your investment. (Do let Blooom check for fees, they specialize in managing 401ks so you can get the most out of them).

If your employer doesn’t offer a 401k, you can open an IRA. The benefit of investing in these retirement accounts is that they have tax advantages. But for those of us who have trouble saving money, retirement accounts can be especially helpful because there are various penalties and fees for most early withdrawals (before age 59 1/2).

So you can take money out of these accounts to spend on silly stuff, but it’s going to cost you which is hopefully enough deterrent for even the most reckless spenders.

13. Don’t Mix Business and Pleasure

If you have a small business, even if it’s really small like selling items on Etsy or catering on weekends, set up a business entity. You can do the paperwork yourself or have a company like Legal Zoom do it for you, but it’s essential to set up something like an LLC.

Separating your business finances from your personal finances protects your personal assets if your business were to be sued. There are some pretty great tax advantages too!

14. Have the Right Insurance

There are several types of insurance we should have, depending on our situation, in order to protect our money. We’ve all heard horror stories about people who have had to file bankruptcy due to exorbitant medical bills. So medical insurance is a must.

If you have a family history or risk factors for chronic, debilitating diseases like diabetes, dementia, strokes or others, you might consider long-term care insurance on top of your regular health insurance. Many people believe Medicare covers long-term care, but it does not under most circumstances.

Staying in a nursing home can cost hundreds of dollars a day, having skilled nursing care in your own home can cost even more. Long-term care insurance can help protect the money you’ve spent decades saving for retirement.

If you own a home, your mortgage holder probably required you to purchase home owner’s insurance. But what about renters? Some landlords do require tenants to have renter’s insurance, but I don’t think I’ve ever had one who did. I have always had it though. Some people believe that whatever insurance their landlord has will cover their belongings as a tenant, but that isn’t true.

The landlord’s insurance will only cover damage to the structure, the building itself. Renter’s insurance does more than just protect your belongings though. If a guest in your apartment were to injure themselves, renter’s insurance protects you from liability. It also pays you for lodging, food, and other expenses if your apartment were to become uninhabitable due to something like fire or water damage.

And renter’s insurance is really affordable, depending on the level of coverage you need, you can find it for under $10 per month. Everyone who rents an apartment should have this vital coverage.

It’s Your Job

You already work hard for your money and protecting it can seem like another job. In the “good old days” all you had to do to protect your money was physically hide it from other people which is why you hear old stories about people putting their cash into coffee cans and burying the cans in their yard (my grandmother did this, only she didn’t bury the cans, just hid them around the house. She was weird about money the way a lot of people who grew up during the Great Depression were).

Things are a little more complicated now. Our money or at least the information required to get at our money is floating around in a million different places, every brick and mortar store we shop in, every website we shop online with, every hotel we stay in, every restaurant we eat in.

There are just so many opportunities for thieves and scammers to get your money that you have to take precautions to protect it. Protect your money like it’s your job!

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