9 Common Financial Mistakes to Avoid

Financial mistakes can cause you more than a bit of buyer’s remorse. Some can cost you the lifestyle you would have otherwise enjoyed, set you back in your career, or prevent you from putting your kids through college. In some cases, a mistake can even lead to a postponed retirement. As you continue to plan and save for the future, watch out for these common financial mistakes that can prevent you from reaching your goals.

You don’t have some liquid assets set aside. What happens if your roof needs repair, your car is totaled, or you incur high medical bills? Without money in a savings account, you could be forced to use a high-interest credit card.

Maxing out your home purchase. It’s tempting to buy more house than you really need, but becoming over-extended on your mortgage makes you “house poor”. With little cash left over in your budget, it becomes difficult to save for the future.

Too much job loyalty. Your salary should increase every few years, to keep pace with the rising cost of living and to fairly compensate you for your experience. If you’ve hit a “salary plateau” and cannot advance any further with your current company, consider opportunities elsewhere. Otherwise you could be selling yourself short.

Carrying a credit card balance. Strive to pay off purchases within the billing cycle, so that you never accrue interest. Otherwise, due to compounding interest, you’re essentially paying more for every item you buy.

Relying upon one source of income. Consider a side hustle, real estate purchase, or some other form of secondary income. You’ll earn more overall, and enjoy more security.

Neglecting to purchase insurance. Disability and life insurance should be viewed as mandatory, assuming your family relies upon you financially. These forms of insurance will help to replace your income in the event of an unforeseen accident or illness.

Pooling all of your money. No one believes it will happen to them, but joint bank accounts are drained by a disappearing spouse all of the time. It might not sound romantic, but it’s practical; always set aside some assets in your name only.

Forgetting to write a will. An estate planning attorney can help you draft a will that specifies your wishes in the worst case scenario, and protects the assets that you leave to heirs.

Making emotional decisions. If you’re making any decision out of fear, it is likely to be a regretful one. Please know that you can always consult with us before making a decision about your investments or savings, and we can offer a neutral and experienced second opinion.