Halloween is upon us, so let’s take a look at the spookiest, scariest financial planning mistakes that are sure to make you scream! Gather around the campfire, grab your flashlight, and let’s dive in.
1. Ignoring Looming Debt
Your financial strategy can easily be dragged down by looming debt. As high-interest builds, debt payments become perpetual, and you may feel like you can never catch up or make progress. By focusing diligently on eliminating your debt from the beginning, you can set yourself up for financial success and build significant wealth—without the feeling of dread that tends to come with credit card payments.
2. Buying More House Than You Can Afford
The house you’re dying to have may not always be the house within your budget. At times, even if you can afford a particular house, you may be setting yourself up to be stretched too thin. The financial strain brought on by an overbearing mortgage can create undue stress and worry, and make finances a tense conversation within your family.
3. Not Keeping Track of Your Spending
Automated payments, forgotten subscriptions, and other out-of-sight-out-of-mind expenses can take a toll on your financial strategy before you know it. Be aware of how much you are spending in certain areas, as you want to be sure that every dollar you earn is working for you. You can try simple moves, such as setting up notifications on your debit or credit card for each transaction—this is also an excellent way to monitor your accounts for possible theft. You can also use a budgeting app, like Dave Ramsey’s EveryDollar, to see where your money is going each month.
4. Avoiding Planning for Your Estate
It’s common and natural that you wouldn’t want to think about your death and how it can affect your loved ones. However, consider that estate planning now will save your family members from stress and money down the road.
5. Never Talking to Your Family About Finances
Financial conversations can be tense, but they don’t have to be. As often as you can, have open, honest discussions with your spouse or other family members about your financial position, challenges, and goals. These talks can help you and your loved ones have a healthy and productive money mindset.
6. Having a Set-It-and-Forget-It Mentality About Your Retirement Accounts
Your retirement account fluctuates frequently. It’s nerve-wracking to check on your accounts too often; however, you should be watching their progress regularly. You may need to diversify your accounts differently or consider a different type of account altogether. Your financial advisor can work with you to build a consistent strategy for a healthy retirement plan.
7. Neglecting to Review Your Insurance Policies
As you age, you will likely need to make changes to your current insurance policies. You should also check in regularly to ensure that you have the coverage you need.
8. Not Saving Money for an Emergency Fund
Emergencies happen, unfortunately, and we can’t predict their timing. Saving up an emergency fund helps you pay for the unexpected, keeping your financial plan running smoothly. Most advisors suggest saving three to six months’ worth of expenses.
9. Making Money a Taboo Topic with Children
As we mentioned earlier, money can be an open conversation without embarrassment or tension. Your children look to you to learn everything they know about finances. By letting them in on conversations early and teaching them basic principles, you can help them grow up with a healthy view of saving, spending, and investing.
10. Assuming that You Don’t Need a Financial Advisor
Financial advisors act as your ally, working with you to build effective strategies to work toward your goals. Before you discount the idea of hiring an advisor, consider that your return on investment can affect your retirement, estate planning, taxes, charitable giving, and several other areas that are integral to your long-term financial success.
We Can Help You Avoid These Nightmares
Are you ready to take control over your financial future? Contact us today to schedule a consultation.
