Here are 7 common financial mistakes due to a lack of a plan:
1. Procrastination. This does not help you save for retirement, and it will not help you reduce your taxes or transfer money to your heirs. Delaying necessary financial planning can be perilous. Some avoid planning out of fear – they simply don‘t know where to begin. Don‘t let this stop you. Decide today to do something about your financial future.
2. Putting all your eggs in one basket. Too many people invest everything in just one place. Try spreading your assets across multiple investments, and you‘ll help to insulate them against the effects of economic ups and downs.
3. Buying more home than you can afford. Interest-only loans, option adjustable-rate mortgages (option ARMs) and lease purchases still tantalize couples and families with small nest eggs, modest salaries and credit blemishes into taking on much more liability than they can bear. The result is often foreclosure. This has proved costly to millions of Americans. By speaking to a qualified professional they can make sure the amount of home you purchase makes sense for you.
4. Making impulsive or emotional money decisions. A decision that feels good (or exciting) may not be appropriate for you financially. Avoid spur-of-the-moment financial choices, and the influences that may trigger them. The next time you‘re about to make a snap decision, stop and think. Will you lose the opportunity if you take a while to consider your next move? Consider and compare whenever possible. Also make sure your spouse is on the same page as you. Money problems are still one of the top reasons for divorce!
5. Living above your means. In the acclaimed book The Millionaire Next Door, authors Thomas Stanley and William Danko found that most millionaires drive used American cars and shun a champagne-and-caviar lifestyle. It is the middle class that is generally seduced by big-debt, big-ticket luxury items … sometimes all the way into bankruptcy. Make wise decisions about money, take the time to consider big purchases, and be mindful of what effect they‘ll have on finances down the road.
6. Avoiding all risk. Caution is good, but being extremely risk-averse (for example, refraining from investment and just putting your money in an FDIC-insured bank account) may cost you in terms of the growth of your retirement savings and assets. If you‘re holding back because you‘re unsure, speak with a financial advisor.
7 Taking on too much risk. Whether it’s self insuring through not heaving health insurance, having too little or no disability or life insurance, or investing too aggressively, many who lack a financial plan take on far too much risk…
Want to see if you plan is on track? Give us a call at Faith-Based Investor at 866-594-9919 and we can spend 30 minutes to see if you’re heading in the right direction or need a few adjustments.