7 financial decisions fit for a fool

How you and your money could be parted.

We like a good April Fool’s prank as much as anybody, but when it comes to personal finances, we don’t kid around. A lot of people are struggling economically right now -- some through no fault of their own, others because of silly moves they made along the way. They say a fool and his money are soon parted, but we want you to keep your money for a long, long time. So let’s learn from the mistakes of others, and consider these seven foolish money decisions people often make:

1. Fooling with your 401(k)
Here’s a recent trend that’s not amusing: more and more people are borrowing from their 401(k). For some, it may be the only option in hard times, but for others it’s not the best choice, because the interest is not tax deductible and hefty fines and tax penalties can result if the 401K loan is not paid back on time.

2. Not saving
The national savings rate has deflated like a whoopee cushion since the 1980s, when it was up around 14 percent. It fell below zero in 2005 and has stayed there ever since. Everyone should have an emergency fund of 3 to 6 months’ living expenses, and really savvy folks keep savings in an easily accessible, high-yield savings account, such as a money market fund.

3. Being careless with credit cards
It’s not funny how much trouble credit cards can buy you: getting too many can hurt your credit score, paying late can cost you big time and using a credit card for a cash advance can be outrageously expensive.

4. Investing for the short-term
Get serious! Turning a quick five figures in the stock market sounds great, but most of us don’t have the investing savvy to actually make it happen. When investing, a conservative, long-term strategy generally makes the most sense.

5. Borrowing too much
This is one banana peel a lot of people have slipped up on lately. Remember the maximum amount you qualify to borrow is not necessarily what you can afford to borrow. Assess your budget before you sign for that loan.

6. Lending money to friends
If you expect to be paid back but don’t put the loan details in writing, you just might end up with pie on your face.

7. Being financially sloppy
It’s a no brainer, isn’t it? It costs $2.89 to buy an accordion folder and get your financial records organized, but thousands over a lifetime in late fees and other penalties that may result from shoddy bookkeeping.

Before you make any major financial moves, consult a professional money manager. No joke.