If you’re serious about achieving your financial goals, you need to make sure to avoid these financial mistakes:
Not planning. Many people earn, spend, save, and invest without much thought or planning. With only vague goals, it’s difficult to assess whether you are making much progress. Goals help set your financial priorities and provide motivation to reduce spending and save for the future. Quantify your ultimate goal as well as interim goals so you can track your progress.
Not saving and investing now. Don’t use the excuse that you don’t have enough money to start saving for your financial goals. Even if you only start out with small amounts, you need to make saving a habit. Over the years, you can increase your rate of saving.
Not communicating. For many, financial matters are still difficult subjects to discuss, even with a spouse. It is important to discuss your views on a variety of financial issues, paying particular attention to potential sources of conflict. Understand each other’s views about earning, spending, saving, investing, and borrowing.
Does one of you like to save money, while the other prefers to spend it? Does one feel comfortable with high debt levels, while the other can’t stand the thought of paying interest? Different money issues will be more important at one stage of your marriage than at another. Thus, you may find you have no money disagreements for years, only to be faced with an issue you can’t agree on.
Not diversifying your assets. While you want to make sure your investment portfolio is adequately diversified, there are other aspects to consider. If you work for a company in a volatile industry, your spouse might want to seek employment at a more stable company. No matter where you work, don’t purchase too much of your company’s stock.
Also keep an eye on the outlook for your home’s value, where the appreciation potential is often tied to the economic growth in your area. If your area is dominated by a certain industry, the prospects for that industry can impact your home’s value. Thus, you may not want to own stocks in that same industry.
Not protecting yourself from financial catastrophes. While no one likes to think that bad things can happen to them, the reality is that no one knows if a financial disaster is right around the corner. Set up an emergency cash reserve to deal with short-term setbacks, such as a temporary job loss, a short-term disability, a major home repair, or a large medical bill. Assess all your insurance needs, including life, health, disability, long-term care, homeowners, automobile, and personal liability.
Not seeking help. The process of coordinating and organizing your finances can seem overwhelming. Don’t make the mistake of thinking you have to take care of everything yourself.