When Zaneilia A. Harris landed her first job out of college as auditor with the federal government in 1993, she earned an annual salary of $25,000–"more money than some of my family members had ever seen.†So when relatives asked to borrow money, she felt obligated to help out. "Others had helped me, so I felt I had to give back,†she says. She even cosigned on a used car loan for a family member, although the former accounting major and Black Enterprise reader says she knew better. Inspired as a student by an article she'd read in BE, she wanted to learn about finance so she could better understand how to manage money and eventually pursue a career in finance. But knowing better and doing better are two different things. When the loan went into default, Harris faced a dilemma: either pay the nearly $5,000 bill or tarnish her credit report. For roughly two years she paid nearly $200 a month to fulfill her relative's obligation. "When you're just getting out of college, that's a lot of money,†she says. For Harris, the costly lesson proved invaluable. She says it taught her how to decline constant requests for money. "I share my personal story with my clients,†says the now 40-year-old financial adviser and owner of Harris and Harris Wealth Management Group L.L.C. in Upper Marlboro, Maryland. Countless Americans compromise their financial future because of money mistakes they could have avoided. Some emerge more astute after averting a path to financial disaster, while others find themselves in seemingly bottomless money pits. In today's unpredictable environment, you can't afford to sleepwalk while managing your money. For example, in response to financial reform, a number of banks have increased their out-of-network ATM fees, started charging monthly fees for debit card purchases and paper statements, and eliminated free checking. Those costs add up, leaving you with less money for saving and investing. So that you can stay on course, here are five common money mistakes and ways you can steer clear of them or rebound from financial blunders. (Continued on next page) Mistake 1: Not creating an emergency fund I know you've read in the pages of this magazine about the importance of an emergency fund to handle unexpected expenses such as car repairs or a furnace breakdown. But this is one smart move that can't be overemphasized. Without this safety net, you'll likely wind up paying for emergencies with a high-interest credit card. In fact, 66% of those with credit card debt report having difficulty saving, according to a survey by credit rating agency Experian and America Saves, a national campaign managed by the nonprofit Consumer Federation of America. Setting clear financial goals is the first step toward saving for a rainy day, says Ken McDonnell, the director of the American Savings Education Council, which works to make saving a priority for Americans. Here's how to increase your odds of success: Strive to save an amount equal to six or more months' of expenses. While it may take you a couple of years to get there, six months' worth of living expenses can provide a cushion for unplanned events such as major home repairs or short-term unemployment, McDonnell says. Have a portion of your paycheck–10% or more–automatically transferred to your rainy day fund. Have a specific amount in mind. Calculate to the penny six months' of living expenses. "If you don't know how much you need to save, how are you saving?†says McDonnell. Once you've achieved that goal, focus on a different financial priority, such as investing. Put convenience over return. If you don't have an emergency fund, you shouldn't spend too much time seeking high returns. Even though the average money market account yielded only 0.55% in October, according to Bankrate.com, "the purpose of emergency savings is to get cash now if an emergency arises,†says McDonnell. "It's not to get an investment return.†(Continued on next page) Mistake 2: Becoming a human ATM for family and friends According to a survey conducted by The Washington Post, the Kaiser Family Foundation, and Harvard University, 60% of African Americans–more than whites or Hispanics–said they or a family member had loaned money to family or friends. There's nothing wrong with helping others. But if you lend money that should go toward your bills, emergency fund, and retirement accounts, you're jeopardizing your financial well-being. If you find yourself putting the needs of others before your own: Give, don't lend. A litmus test to help you decide if you can afford to lend is to ask yourself if you need the money back. If the answer is yes, then you don't have the dollars to lend. Although loved ones may have every intention of paying you back, "Think of the loan as a gift, because it's unlikely that you'll ever see that money again,†says Alexandria M. Cummings, a financial adviser with Polaris Wealth Management in Chicago. Also, learn to say "no.†Lend from discretionary income. You should use only those dollars left over after you've made your regular contributions to your savings, emergency fund, and retirement plans, as well as paid all bills and expenses, Cummings says. Savings accounts and money from lines of credit should be off-limits. "What if you have an emergency the following week and you've already given the money out of your nest egg?†Cummings asks. Offer a lesson, not a handout. There's wisdom in the proverb, "Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.†There are better alternatives to becoming a human ATM. If a friend is regularly having trouble managing finances, buy him or her a personal finance book, suggest a free financial course or seminar, or provide information about a qualified financial professional. By doing so, you will help your friend develop money management skills and break the cycle of dependency. Mistake 3: Mindless spending Most cases of random spending result from being unaware of your daily spending habits, says Jesse Abercrombie, a Dallas-based financial adviser with Edward Jones Investments. To get your spending under control: (Continued on next page) Take the 14-day challenge. Track all expenditures in a notebook for at least two weeks. This will help you gauge the amount and type of purchases you make. Once you identify waste, "Don't go cold turkey,†warns Abercrombie, citing the tendency to splurge later. Instead, cut purchases gradually until you adjust to reduced spending in specific areas. Create SMART goals. Make sure every financial goal is Specific, Measurable, Attainable, Relevant, and Time-bound, Abercrombie says. In other words, you want to know the exact amount and length of time you need to save and that your goals are realistic. Mistake 4: Failing to manage credit As the economy recovers, credit card issuers are offering sweeter deals, says Gerri Detweiler, personal finance expert with Credit.com. A recent First Data Corp. survey revealed that consumers are using charge cards for more purchases and that credit surpassed all payment types in June. The fact is using credit without a plan to pay it off is a recipe for disaster. "A lot of times minimum payments are so low they lull you into a false sense that you can handle it,†says Detweiler. If you find yourself in over your head: Create an accelerated payment plan. Credit card statements now let you know how much you have to pay to retire a bill in three years. "If you can afford that amount, make it a do-it-yourself project,†says Detweiler. Use technology to help you. Smartphone apps such as Matthew King Software's Debt Snowball Pro ($2.99) and Parallel Focus' Pay Off Debt ($2.99) can help you track your spending and consistently pay down your debts. Consider credit counseling. The magic number for debt reduction is three years, says Detweiler. "After that it becomes difficult–either motivation dies or life intervenes.†If you're in too deep to climb out on your own within that time frame, find a credit counselor through the National Foundation for Credit Counseling (www.nfcc.org). (Continued on next page) Mistake 5: Not taking advantage of company benefits Benefits make up about 30% of employee compensation, according to the Bureau of Labor Statistics. So a failure to use them leaves a lot of money on the table, says Michael Erwin, a spokesman for CareerBuilder. Open enrollment typically takes place in October. To make sure you get the most from your benefits: Light the 401(k) match. Make sure you save enough through your employer-sponsored plan to take advantage of any company match, says ASEC's McDonnell. Not only is the match free money, but "401(k) contributions offer tax advantages and are one of the best ways to build retirement savings.†Consider lesser-known benefits. Employees frequently overlook flexible healthcare spending accounts, wellness benefits, tuition reimbursement, and banking programs. Some employers offer employees discounts on items such as personal entertainment, technology, and travel, Erwin says. Don't be afraid to ask. When you're negotiating your salary for a new job, ask for benefits such as telecommuting and tuition reimbursement, suggests Dawn Fay, district president of Robert Half International, a staffing services firm. Telecommuting can save you commuting costs, and coursework may later "translate into more dollars and opportunities.â€