Epic Mistakes To Avoid When Financial Planning
There are a few areas in life that you will want to avoid significant mistakes in, and your finances is one of them. Luckily, you can benefit from others experience in this area without having to make the mistakes yourself. Read on to find out more.
Not expecting the unexpected.
Guess what? Life does not laws go to plan! In fact, you probably know that by now. However, there is a difference between winging it and preparing for the unexpected in the financial sense.
To that end, it can be a major mistake to not have room for an emergency fund in your financial planning, as well as an allowance for health and other types of insurances. Remember, it’s best to prepare for the unexpected and not need the money, that the other way around.
Not having specific goals.
Another major problem that many people make when financial planning they don’t have any clear idea of what their goals are. In fact, they just spend their time treading water, and this can mean that they are not putting their savings and investments to the best use.
Happily, there are professionals like Miramontes Capital out there that can help you navigate the complicated water of your long-term financial goals and how to achieve them. Just don’t be scared to ask for help, because sometimes this can be precisely what you need to prevent you from making a major financial mistaken, even one that comes from omission rather than action.
Not deciding between saving or debts.
OK, so there is one type of person that shouldn’t have savings on their list as a priority, and it the ones that have outstanding in debts. Yes, that right it makes much financial sense to pay off the debts you owe before you start amassing wealth.
Why? Well, it all boils down to interest rates, something that if you look closely, you will see are much higher on the money that you borrow that the money that you save.
What this means is that while saving you may only be able to grow your investment by 1-2 percent in a typical savings account. However, if you have outstanding debt on a credit card that is being charged at 29% APR, paying this off first will actually save you more in the long run. Still confused? Check out the video explanation below.
Not getting a good grasp on your day to day budget.
Of course, all of this advice is useful, but it won’t do a darn thing if you can’t get your day to day budget under control. In fact, if you are currently struggling to balance the books at the end of every month, it might be best to focus on getting that right first, before you start thinking about the future.
Therefore, why not give yourself 6 months in which to get everything under control? Something that you can get help with by using a bugging app, or following the advice in this post. Then you will be in a much better position to deal with the long-term financial planning issues and will be able to avoid this mistake of being unrealistic with your financial goals.