When it comes to money, it is important to make sure you are doing what you can to make sure your money is working for you. However, it seems as though there are plenty of pitfalls that can result in wasting money instead of getting the most out of it.

Make sure you are avoiding the following 7 money traps:

1. Discounting Your Time for Something “Free”

One of the things we often forget is that “time is money.” Don’t forget this. Yes, getting something for free is nice. But is it really worth it to spend two hours in line for a free $4 chicken sandwich? What if, instead of standing around in line waiting for something free, you worked on your web site, or completed a freelance article? There are a number of things that you could do in two hours that would help you toward your money goals better than saving $4 on lunch.

2. Purchasing on Impulse

Whether you pick something up at the checkout stand on a whim or come into the store for a great bargain on something you need (but end up leaving with several full price items you want), buying on impulse can be a real budget buster. Try to shop with a list and only get what you came in for.

3. Buying Something Because It’s a Bargain

Just because it’s bargain doesn’t mean you need to buy it. If you aren’t going to use it regularly, or if you don’t need it, don’t get it just because it seems cheap. Buying stuff to buy stuff is…still buying stuff. Don’t spend money because you’re getting a good deal. Your expenditure should have a purpose.

4. Carrying a Credit Card Balance

Watch out for credit card balances. It’s easy to get in the habit of carrying a balance because the minimum payment is so low. You can make a big purchase and pay only a small percentage of the total each month. Unfortunately, if you pay only the minimum on your credit card you will end up paying quite a bit in interest — and it will take forever to pay off. Instead, save up for big purchases. Then, even if you use a credit card, you can pay it off when the bill comes due and not accrue interest.

5. Buying Something for the Reward Points

Don’t purchase something just for credit card reward points. If you buy something because you can get credit card rewards, or put something you can’t really afford on the credit card just for the points, you will soon find yourself trapped in the cycle of debt. The interest you pay on your balance will more than destroy any value you receive from reward points.

6. Raiding Your Retirement Fund

While you might have to do this if things are really bad, it is best to avoid cashing in the 401k (or any other retirement account) if you can. You will be hit with penalties if you aren’t careful and your principal will no longer be working for you. Many people never actually replace the money they take out of a retirement fund, and that puts their financial future at risk.

7. Investing in Something that Offers High Returns for Low Risks

We all want to believe that we can make a lot of money without risk. However, it is important to remember that there are investment scams out there, and they often promise amazing returns at very little risk. Realize that in the world of investing big returns are only made by risking money. Watch out for investment opportunities that seem too good to be true.

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