Without even knowing it many of people can make several financial planning mistakes in the early stages of our lives. Some are able to recognize the mistakes and work towards correcting them in the future, but some don’t even realize they have made a mistake until it is too late. They find themselves in financial trouble later on in life and there is very little they can do about it.
So the sooner in life you can read this, the better. Some of the points covered may seem like common sense, but it is usually those little things that can get us into trouble. Being reminded of their importance is perhaps all you need to steer clear of any mistakes. Taking some time to seriously consider these ways to avoid financial planning mistakes may mean a future with more financial freedom and less stress for you and your family.
Don’t Procrastinate With Saving
As a teenager you usually see little value in saving money as most things are paid for you – schooling, entertainment, clothes, and college. But you can almost guarantee the day will come when you need to buy your own first car, pay rent in advance for your first apartment or even take a holiday with friends. If you have not put money aside for such events you’ll end up borrowing and so begins the evil cycle of debt. You can never start saving too early. Getting into good habits early with help avoid procrastinating saving into adulthood. If you look hard enough there is always an excuse to delay saving money – you’ve moved into a new home and have mortgage repayments, you have your first child, you don’t have a high paying job, you have so many bills to pay. The key is to save in spite of all these things, it does not have to be much but putting a little aside each week will never do you any harm.
Get Health Insurance Early
We only really consider the importance of health insurance when we are unwell. The key to health insurance is to get it young, and get it while you are healthy. This way you’re eligible for good premiums and can build a solid history with the insurance company. Health costs are continually rising and any simple health concern or accident can really affect your budget. It is these types of unexpected expenses that often put people into financial difficulty because they are simply unprepared. The benefits and security of having good health insurance are paramount to good financial planning.
Don’t Impulsively Borrow Money
The reality is that most people will find the need to borrow money at some stage throughout their lives. Ideally it will be to purchase a home or perhaps start a business, something that could provide good returns one day. Impulsive borrowing is dangerous borrowing. Here we are a talking about credit cards, unnecessarily expensive cars, boats or homes, or any borrowing that is outside of your means. Having more than one loan at the time can be very dangerous as well, financially it makes more sense to cover the cost of the initial loan before borrowing again. Borrowing money can have its benefits. If managed correctly it can help you to gain a good credit score which can ultimately help with things like buying a house in the future. However if not managed correctly you can find yourself drowning in debt and even verging on bankruptcy. The most important thing is to not make impulsive decisions. Ensure you have a clear budget in place before borrowing any money so you are sure you can afford repayments and any interest costs. Consider the term of the loan against the security of your employment for that period of time. Lastly if you have trouble putting aside a small amount of money each week into a savings account, do you think you’ll have the same trouble putting aside a set amount each week for a loan repayment? If this question gets you thinking, you need more time to consider the dangers of you borrowing money – and if this could be your biggest financial planning mistake as it is for most people.
Don’t Touch Your Retirement Savings
Last of all is the most important savings most of us will have, that for our retirement. However you choose to save for your retirement it is essential that you do so. Failing to do so is probably one of the biggest, if not the biggest financial planning mistakes. No one wants to continue to work into their golden years, but unless you’ve saved for your retirement then you may have no choice. We cannot guarantee government support of any kind decades in advance; you can only rely on your own support for a comfortable future.
Financial planning is difficult for everyone; it is about putting in the hard work now without seeing immediate results. This concept is rarely attractive to most people who nowadays want immediate results and gratification for their efforts. If you are still unconvinced, take the time to talk to or research people who have had good financial plans in place, versus those who have made financial planning mistakes. After that you should be fairly certain about whose financial future you would prefer.