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5 money mistakes to avoid in 2011

By Ben Edwards · Bankrate.com
Thursday, January 6, 2011
Posted: 1 pm ET

Did you make any money mistakes this year? Here are five things I did wrong with my finances that you'll want to avoid in 2011.

1. Gambling with insurance
I breathed a sigh of relief when we moved into a new home in 2010. We loved our old house but it was in a 500-year flood plain and we didn't have flood insurance. Our mortgage holder didn't require us to carry a flood policy so we didn't buy the coverage in order to save money. It was a dumb risk to take and I should have known better.

Taking that chance could have been disastrous. The 2010 floods in Nashville that wiped out many homes were a perfect example of the dangers of not having sufficient insurance. Whether its flood, health, life, disability or auto insurance -- make sure you have enough to cover your life circumstances.

2. Missing out on employer matching
During open enrollment this fall I realized that I had been contributing 2 percent below the amount my employer would match in our employee ownership plan. I quickly bumped my contributions up in order to receive the full match but I missed out on free money all year long.

If your employer matches contributions, look for ways to bend your budget so you can invest the maximum amount that they'll match.

3. Delays in updating your benefits
My wife lost her job this year, which is considered a qualifying life event from an insurance enrollment perspective. My insurance, like many others, only allows us to change certain types of coverage during annual open enrollment or in the case of a qualifying life event.

Be aware that there may be a limited time frame in which you can report a life event and still be allowed to update your coverage. I reported it after the 30-day period and wasn't able to make changes. As a result I contributed several hundred dollars more to my dependent care flexible spending account, or FSA, than we spent in 2010.

4. Keeping poor records
When I went to submit a claim to the dependent care FSA I mentioned above, I wasn't able to locate the child care receipts I needed for reimbursement. Fortunately I was able to get a copy from our child care provider, but if I hadn't we could have left hundreds of dollars abandoned in the FSA.

Receipts, statements and itemized bills can come in handy when you're trying to be reimbursed or qualify for a tax credit or deduction. Make sure you have a system in place to keep track of your records.

5. Leaving yourself vulnerable to cyber-crime
I lost probably a week's worth of time earlier this year when I failed to upgrade to the latest software and was hacked as a result. If I could have sent a bill to the hacker for my time, it would have been a large one. Fortunately time was all I lost. Having your financial information compromised can be significantly more expensive.

Be sure to keep your antivirus, software firewall, operating system and applications up to date to guard against attacks. If you can combine this with a strong password and avoid clicking on unknown e-mail links then you should be sufficiently protected from hackers and viruses.

What money mistakes did you make this year that you'll be sure to avoid in the future?

Ben writes about personal finance at MoneySmartLife.com.

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