Nobody’s perfect, we all make mistakes, especially when it comes to our finances. Even the pros take a stumble every now and then. Let’s take a look at a common mistakes people just like you make in their everyday lives when it comes to investments and savings.
- Blunder #1: Failing to save for retirement when employed. Whenever you’re making money, you should be saving for retirement. Translation: a portion ofevery dollar you earn during your working years should be put towards funding your non-working years. Contribute to your company’s 401(k); if they don’t offer one, open an IRA that best suits your needs.
- Blunder #2: Failing to have a get-out-of-debt plan. Paying the minimum on your credit cards and transferring to low-interest cards only to rack up more bills are all prohibitive to your long-term retirement goals. Don’t be an enabler by trying to reason with yourself why you need to add to your debt. Instead, take a proactive step to eradicating it once and for all. First off, don’t spend more than you earn, then determine how much you will put towards debt payments every month. Get it in writing and give yourself clear deadlines.
- Blunder #3: Failing to have and follow a budget. Nobody likes the word budget because it’s not fun and it’s restrictive. However, in order to meet your retirement goals, you need to follow some kind of plan. The key is finding one that works for you and that isn’t so confining that you end up miserable every month. Forbes says you should follow the 50/20/30 Rule, which provides you with the flexibility you crave yet the structure you need. Here’s what you should do:
- 50% to Essential Expenses (mortgage, rent, transportation, utilities, food)
- 20% to Financial Priorities (retirement, savings, debt)
- 30% to Lifestyle Choices (travel, gifts, dining out, shopping)
You can’t just have a budget: you need to track it for it to be effective. Then you can see exactly where your money is going and where it can be better spent/saved.
- Blunder #4: Living hand to mouth. It’s easier said than done when you’re living paycheck to paycheck, but it’s time to get out of this rut now. One way to give yourself a cushion is to have a slush fund of sorts where you sock away $100-$200 in the event you’re short on cash. You have a surprise medical bill, you had a small repair to do to your vehicle, etc. These small little emergencies, if you have a fund in place to cover them, won’t force you to live so leanly in between paychecks.
- Blunder #5: Not having a FINRA lawyer (stock fraud lawyer) in your corner. If you suspect mishandling of your accounts by your stock broker, you want to have a powerful resource behind you to help you recover those funds.