Today with all the problems we are facing, like the stock market’s volatility, house values crashing, and debt running out of control, we need to take action with our money and really plan ahead for our future. If we don’t, no one else will! So with that being said here is a list of 9 items that are common mistakes many of us make – including me from time-to-time.
1. Procrastination. This is the biggest money mistake any of us can make is putting off until tomorrow what we should have done yesterday. This is probably the biggest financial mistake any of us can make.
2. Failure to Establish Definite Financial Objectives and Implement a Plan for Reaching Those Objectives. None of us plan to fail – we simply fail to plan. We fail to set specific objectives and implement a workable plan for realizing those objectives. Ask yourself, do you have a well thought out financial plan? Would you like to?
3. Time Value of Money. Most people do not understand the tremendous potential of compounding money over a period of time. Albert Einstein did however, for he is known as once saying, “The most powerful force in the universe is compound interest.”
4. Failure to Recognize the Impact of Inflation. Inflation reduces the purchasing power of dollars over time. The purchasing power of $100,000, 10 years down the road is only $67,556 at an inflation rate of just 4 percent.
5. Lack of a Clear Understanding of Tax Laws. Failure to Implement Strategies to Legally Avoid Taxes. Income, estate, and gift taxes can be substantially reduced or eliminated altogether through effective tax planning. Understanding implications of tax laws can result in fewer dollars making the one-way trip to Washington. What are you doing to plan for future (inevitable) tax hikes?
6. Inadequate Protection Against Unforeseen Losses. Life, home, health, auto, disability, liability and other forms of insurance are the foundation of a sound financial plan. What are you doing to protect against unforeseen and catastrophic losses that befall us all?
7. Letting Family Spending Run Wild. Lack of discipline in spending habits can cause even the best-laid plans to fail. Do you need help setting up your spending plan?
8. Unrealistic Expectations. It takes time to build wealth. Too many people expect dramatic results too fast and become disenchanted when get-rich-quick schemes do not materialize.
9. Failure to Use Professional Advisors. None of us can expect to live long enough to become expert at everything – especially the intricacies of efficient financial planning. We need to surround ourselves with professionals who are specialists in their areas and rely on a qualified financial advisor to coordinate the efforts of your entire financial team. Are you going it alone?
Feel free to contact me anytime if you ever have any questions.