How you manage your money is more important than how much money you have to manage. You see it on the news ever day, banks are failing, homes and jobs are being lost. All around you there is evidence of economic crisis. How does this happen in the wealthiest nation in the world? Bad money management is recipe for disaster, for big business or your personal budget.

What is happening in the United States has been in the pipeline for quite some time. We had all become accustomed to endless amounts of credit that was easily available to just about anyone with a paycheck.

Consumer gluttony and overconsumption has taken over and the effects are making themselves known throughout the current crisis. Avoiding the following pitfalls can help prevent your own personal financial ruin.

Do Not Borrow From Your Retirement Fund

Your retirement fund is just that, a fund for you to live off of when you retire. It is not a fund to bail you out of financial trouble. If you withdrawal that money now you will most likely lose a good percentage to fees and taxes not to mention not having it available to build until you really need it. There is rarely a case where the benefits outweigh the negatives in this situation.

Do Not Use Home Equity To Pay Off Credit Card Or Other Debt

If you can avoid this option, you are doing yourself a favor. While you may have access to the equity in your home, it is better off left untouched like your retirement money. You may be able to pay your credit card debt at a lower interest rate if you use a home equity loan or line of credit, but then you are putting your house on the line until you repay the debt.

In many cases, people that need help paying off credit card debt do so because of poor money management. Time and time again, people use the equity in their home to pay off credit card debt, then in turn rack up more credit card debt, leaving them farther in the hole with the added pressure of possibly losing their home.

Do Not Live Beyond Your Means

While this should be obvious, clearly this message has been lost. Many frugal folks say if you can’t pay for it with cash, you don’t need it. Now that might be very difficult for younger generations to get a handle on, but it is sound advice. You only buy what you can afford to pay for at that time.

If you want a bigger ticket item, such as a new TV, or living room furniture; you WAIT to purchase it until after you have saved up the money. As hard as it is to believe, there was a time (not that long ago in the big picture) that this was the primary way of paying for things.

Do Not Forget to Save

The rate for personal savings has not been as low as it currently is since the Great Depression. You must make it a point to save a little bit of money each pay. Unless you will go hungry by putting that money in savings, you cannot afford to skip this step.

These simple steps can save you from a lifetime of financial struggle. By avoiding some common mistakes, you have a better opportunity to manage your money, instead of having your money manage you.