The list of financial mistakes we can make seems endless. However, we have found that many of these issues are rooted in a common failure to adhere to basic financial advice. Here are three common mistakes we see and how to avoid them.
Not Setting Realistic Financial Goals:
In finances and life, deliberate action and highly specific goals are often considered essential to achieving anything. Whether it’s paying off debts, retiring when and how you want, or helping your child pursue higher education, long-term goals usually need a clear, definable action plan with several smaller action steps to guide you along the way.
Not Saving for Emergencies:
According to a 2021 survey by The Federal Reserve, more than 25% of adults surveyed said that they wouldn’t be able to cover a $400 emergency expense in full. Life happens. Water heaters break, cars stop running, and people unexpectedly lose their jobs or become ill. Unforeseen expenses like these are believed to be one of the biggest reasons people spiral into debt. Consider building an emergency fund into your budget so that when something happens, you’re better prepared.
Focusing on Lifestyle over Quality of Life:
Your lifestyle is based on your choices and is often influenced by external factors and personal beliefs about what might make you happy. Quality of life is much more subjective; it measures happiness and the enjoyment you derive from life. While lifestyle choices can lead to a better quality of life, choices like buying a house you can’t afford, or over-consumption at the expense of your savings, can lead to a quality-of-life decline. By focusing on your quality of life and what matters to you, you may experience more things that make you happy, some of which might not cost a thing.
Avoiding these mistakes will help guide you to financial success and set you apart from those who continue to make poor financial choices. We are rooting for you on your financial journey!
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
Email me your questions at financial.freedom@lpl.com or call 541-574-6464. You can also post you question on our Facebook page: https://www.facebook.com/FinancialFreedomWealthManagementGroup
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