Financial mistakes have often been found to follow a pattern, some weird patterns indeed. Before setting out on your plans, consulting a fiduciary financial advisor could sort things before it all goes haywire.
There’s one category of mistakes committed by the newlyweds and then there’s another that the retirement planners make. Media personalities and celebrities are yet another chunk that commonly commits certain financial mistakes. And this goes without mentioning that women are good enough competitors when it comes to committing financial mistakes!
This article throws light on some of the commonly made mistakes concerned with financial planning. First things first, financial planning needs to be kickstarted as soon as you start earning. However, the process isn’t necessarily a one-step approach.
Major financial mistakes and their categories
The major financial planning mistakes can essentially be categorized. Let’s glance through them…
Lack of financial transparency
Newlyweds could fall prey to this. Whether couples realize it or not at the very onset of their marital life, being transparent is crucial. Marriage adds to your financial responsibilities. You’re mistaken if you think they get divided! You need to plan for the future; you need to plan a family, don’t you?
Therefore, credit card debts, car loans, lawsuits, etc. should be on the table before tying the knot. Assuming that a double income would pay off the personal debts is not okay at all!
Overlooking the effects of tax changes on finances
Tax planning isn’t a different thing; it’s very much a part of your financial planning. The choosing of your investment accounts where you keep your money as a part of your future financial plans is important. For instance, money kept in a 401(k) and IRA account is non-taxed. The funds, therefore, grow tax-deferred. Investments in a Roth IRA account are done with some after-tax dollars, and hence, the withdrawals happen to be tax-free.
[Also Read: Rich man’s Roth]
A man’s lifestyle advances; it never retreats, does it? One needs to be extra careful if he or she is too spendthrift! In your leisure years, cutting down on financial expenses is a noble thing to do – you remain prepared for all the unprecedented expenses that you might have to incur in the future.
There are a plethora of financial mistakes that individuals often fall prey to. A fiduciary financial advisor, on the other end, would not only suggest the best investment opportunities but also hold you back from taking the wrong step.