Financial success often driven by avoiding big mistakes

04/15/2021

 

Everyone makes hundreds of financial decisions in their lifetime and no one ever makes them all correctly. However, there are a few mistakes that everyone needs to avoid to avert financial catastrophes. These are decisions that can have long lasting consequences.
 
What are the general areas that people can make serious financial mistakes?
The decisions that people make and end up regretting later are mostly regarding their kids, their retirement savings and their use of credit. This is the big three of where most people end up making mistakes that have the greatest consequences for their long term financial success.
 
Let’s start with kids, what are the biggest mistakes that parents can make?
There are two main mistakes that parents make. First is feeling compelled to give your kids everything, even if it creates a financial hardship. Parents can overspend on vacations, cars for their kids and even entertainment.  It also creates poor financial habits in their kids. The second is choosing an expensive college that requires the parent, child or both to borrow extensively to attend.
 
What are decisions that can be serious mistakes regarding retirement?
Deciding to wait to start saving for retirement.  Waiting just 10 years can often mean you will need to save twice as much per month just to reach your goals. Or conversely one might have to work longer that desired to have the savings needed for retirement. Other mistakes include prioritizing houses, cars, kids’ educations and vacations over retirement savings because all of these decisions will siphon money that could be used for saving for retirement. 
 
What are some of the important mistakes to avoid with credit?
First and foremost it is not working to build the best credit score possible. A higher score means lower rates and lower payments. The second mistake is overextending on credit whether it is buying too much house or car to using “by now and pay later loans” too frequently, a heavy debt load can impact your ability to save and lead to a variety of other poor financial decisions.
 
How can a person avoid making decisions they will regret later?
It all starts with building a realistic budget that includes short and long term savings and then using this budget to make all future decisions. Planning should be an important part of your life and for some, getting professional advice might help with solidifying a plan. At a minimum educating yourself and using online tools to make better money moves is critical for everyone.

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