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Are you one of those extra cautious people who checks and double checks security settings on your computer, checks Snopes for the latest scam, and are diligent about your privacy?
Those steps are all great, but you still may be at risk of losing your money today. Read about these 7 different ways where your money isn’t safe.
You may think that your money is safe in a bank, right? Yes, and no.
Yes, the FDIC protects your account up to $250,000 (per account), but this does not cover stocks, bonds, mutual funds, life insurance policies, annuities, or securities. So, if you have invested in those and they lose money, the bank can’t help you there.
There are also other ways the bank can lose your money:
- Fees and hidden charges – Fees for keeping either a low balance or a high balance, service charges, and a bunch of other hidden fees can slowly drain our money.
- Online Safety – There’s a small chance your online banking is not safe. This happens when you either mistype the URL and end up on an identical but fake page; using public Wi-Fi, or not signing out of your session completely.
- Escheatment laws – Accounts that are dormant after a period of time can be claimed by the State to use for themselves.
- Bail In – There’s a law where shareholders, bondholders, and depositors, rather than taxpayers, are responsible for the bank’s risks in the event of a failure.
The potential of these happening are slim, but still possible. You may want to have different bank accounts for added safety (but earn less interest), keep changing your passwords, and keep any access to your accounts limited.
So, you’ve been putting away money into a company’s 401(k) for your retirement. You expect it to stay there under your name and earn interest, right?
What if someone within the company decides to embezzle it and takes off with it all? How about something more covert, like withdrawing 401(k) payments from your paycheck but pocketing the money for themselves instead of depositing them into your account?
Sadly, this does happen, and even though a Federal Investigator is appointed, many employees are lucky to even see half of their monies returned.
To protect your retirement money, you can:
- Make comparisons – Check your 401(k) paycheck withdrawal amounts with the amount on your W-3.
- Watch your company’s financial status – if they’re struggling, then be alert and move your 401(k) elsewhere
- Read your financial statements – you should receive regular statements from your retirement account. Check the amounts and if they’re regular (missing deposits or amounts is a bad sign)
- Diversify – Don’t put all your money into one retirement account, have several with different companies.
You could lose your money today (or pretty quickly), if you don’t have any insurance or don’t have enough coverage.
Whether it’s home, auto, medical, disability, or life insurance, always make sure you have enough to cover your full economic worth (or more).
Let’s look at some scenarios:
- You buy the lowest medical insurance that has a $6,000 deductible and a 50% co-pay. You have an accident & your ER medical bills costs $3,300. You’ll get a bill for this full amount if you haven’t met your deductible yet. If you have, your bill is still $1,650.
- You buy home insurance to insure your contents and the mortgage, but not for replacement value. Your house burns down and you get reimbursed for its real estate value $115,000 – but it costs $225,000 to rebuild.
- You buy a $250,000 life insurance policy, but it costs the average family with children over $233,610 (not including college), then there’s your debts and any taxes due.
It may seem expensive to pay more monthly now for the extra coverage, but it sure is much better than the consequences.
We at Frugal for Less have emphasized in many different articles the importance of having an emergency fund.
An emergency fund is simply money saved and set aside to use specifically for emergencies. This is usually $1,000 plus 3 to 6 months of covered expenses.
Not having an emergency fund will put you into severe financial debt. One where it might take a long time to climb out of. Take the ER bill I mentioned earlier – $3,300 is a lot to pay for, even if you work out a payment plan with the hospital, it’ll screw up your budget and you could fall behind on other bills as well.
Save as much money as you can in an emergency fund for any sudden circumstances.
Many of us receive emails from so many sources – our banks, credit cards, shopping sites, and many more places. This isn’t necessarily bad, it helps us stay on top of things, right?
But some people are unaware of phishing scams out there. Phishing is where a con or hacker sends an email that looks almost exactly like a commercial site’s email. This email may say something like:
- Confirm your account – Email asking you to confirm your information on an account with a link. Except the link leads to a fake site and steals your information.
- Your account is locked – Similar to the one above with the fake link and same result.
- You missed a delivery – A email states you missed a delivery and to click on the tracking number. Once clicked your computer gets hacked with malware.
- Refunds – A email says a store (Amazon, etc.) miscalculated your total and you’re entitled to a refund. You’re asked to update your address and the scam link uploads malware.
You can protect yourself by ignoring these emails and either calling or going to the website (not through the email) and verifying it yourself. You can read more about other scams out there.
You can lose your money really quick by investing it if you have no idea how to do it.
Other ways you can lose your investment are by:
- Day-trading – Planning quick buy and sell periods to gain a little profit is a sure-fire way to lose it. There are so few day-traders who have a long-term success record.
- Penny stocks – These are so small that they’re easy to manipulate and are really trying to sell dreams.
- Getting loans – Taking loans out on your portfolio, or using margin, to buy more stock can set you up for a huge financial debt.
Lastly, one way you could lose your money quickly is by not keeping your life private.
With more and more internet sites and cell phones out there, the less private your life is. You’d be surprised how easy it is to grab your private information.
Some scenarios where your information may be exposed:
- You’re waiting in line or looking at something and someone has a card scanner and scans your wallet or purse. (See the video below)
- You “check-in” or publicize on social media that you’re going on vacation, you’ve just announced you’re open for thieves.
- Packages you order get stolen off your porch – this is happening more and more frequently.
- You use a Valet or left your car unlocked for a bit. Thieves can copy your garage door remote and check your GPS for your address and go rob your place while you’re inside.
To protect yourself, use these techniques:
- Use as little information as possible when filling out online forms
- Block cookies from your browsers
- Watch what you share on social media and limit access
- Google your name and see where it pops up and fix it.
- Get a P.O. Box and have packages delivered there.
- Mark your “Home” on your GPS to the nearest intersection or a store nearby, never your exact address.
There are many ways to lose your private information, but there are also many ways to protect yourself.
You don’t need to start panicking and squirrel your money away under the mattress now. The odds of losing your money is extremely low.
You just need to remember to not to put all your “eggs into one basket” as the saying goes, and to be vigilante about your privacy – both online and off.
Look at these other ways to protect yourself and your money: