Your biggest money mistakes -- and how to avoid them

Cashing out retirement savings

It might be tempting to tap your 401(k) or IRA to pay medical bills or credit card debt, cover living expenses or book an exotic vacation. If you’re under age 59 ½, there is more than the loss of compound interest at stake.

"It never benefits you to withdraw the money before retirement," warns Joe Wilson, a wealth management adviser for TIAA-CREF. "You’ll be hit with taxes and penalties for early withdrawal and spending money you’ll need in the future."

Even if it seems like your only choice, it’s best to consult with a financial planner to go over all of the options first.

Smart move: Start an emergency fund.

A savings account has no penalties for early withdrawals, and the funds are readily available if you need them. It can be a good alternative to dipping into retirement funds.

"Taking these steps now, before you get into trouble and start thinking about taking money from your retirement account, can save you a lot of financial trouble," he says.

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