Nobody lives a mistake-free life. Imagine how boring that would be. A life with no mistakes, no lessons learned and no maturation sounds unfulfilling.
At the same time, humans try to avoid disastrous mistakes. Learning to handle your money will undoubtedly cause mistakes. Just ask Cyprus.
Last week the island country’s two major banks sought a $13 million bailout. It’s really not much compared to the $650 million Eurozone leaders have handed out in the last three years. But alas, Cyprus did not receive the funds. There’s more to the story that can teach all consumers four important things.
Don’t expect a bailout
Do your best to never find yourself in a situation that’ll force you seek a handout. If a country can’t get a bailout, what makes you think you can? In fact, things got worse for Cyprus. Eurozone leaders told Cyprus that only consumers who had more than 100,000 Euros deposited would take a loss, which leads to the next lesson.
If you have bank accounts with $250,000 or less in the U.S., the FDIC insures your money. Better yet, when the banking system is in trouble, the U.S. government insures all deposits. This happened in 2008 to keep Americans from making a run on the banks.
Keep your money safe
When you’re deciding where your hard-earned money should go, do it wisely. Safe investment options exist, especially for your retirement. For service members, the TSP Roth is a great option, as is the standard Roth IRA. Certificates of Deposit are low-risk, shorter term investments.
You must have an emergency fund
Imagine being one of those large depositors in Cyprus who’s going to lose money right now. They’re either glad they have an emergency fund or regretting not saving money. Crises pop up and it’s best to be prepared for them. Yours may not be a banking collapse, but a blown transmission or unexpected accident should easily be covered by your emergency fund.
The Cypriot bank crisis is another example of human error, led by Eurozone leaders to punish their largest depositors. Before you make a giant mistake, learn from Cyprus’s.
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