The Financial world is very tricky to navigate. Every situation is different and there is no cookie cutter, one size fits all financial plan. Professional guidance is required if you want to maneuver it successfully so speak with your fiduciary advisor in Orlando and avoid these common financial errors that we see people suffer through all too frequently.
Living Paycheck to Paycheck
Far too many Americans aren’t saving enough money. According to Forbes, approximately 78% of Americans live paycheck to paycheck in order to make ends meet. This is not just the plight of those who are impoverished or work in low wage jobs either. About one in ten people earning $100,000 or more also find themselves in that boat.
Even if it is a small amount, start putting money away immediately. Stash a little away after each paycheck, because The College of Financial Planning recommends securing at least three to six months of savings for an emergency fund. And on a more interpersonal level, one of the leading causes of stress is financial. Having a strong savings, or a strong start to a savings strategy will help alleviate that emotional burden.
Not Knowing Where Your Money Goes
You never want the end of the month to arrive, be out of money, and not know why. It is easier than it has ever been to track spending. Even if you prefer to do it the old fashioned way, there are simple banking apps to track and show your receipts and help you tabulate your spending. I prefer a slightly more complex app that tracks cash, where I’m spending, what I’m spending on, and what account or credit card was used at that particular time. If tracking expenditures is new to you, focus on the essentials: mortgage/rent, major payments, like for your car for instance, and utilities. Next begin to include your financial goals: retirement, emergency fund, and debt repayment. The final bit of spending that needs to be accounted for is your lifestyle decisions. Make sure you pay close attention to your vacations, hobbies, shopping, and the like. In this modern day, there’s really no excuse to not be tracking your spending habits. It will help with financial organization, and planning.
Not Starting to Save for Retirement
Everyone’s life is different, and therefore everyone’s financial situation is different. Retirement plans come in many different shapes and sizes. The important thing is that you start saving for it; somehow. Don’t wait to start planning and putting away for retirement. The earlier that planning starts, the better off you will be, because of compounding earlier deposits will have a lifetime to grow. Pick a method that works for your situation and either sign up for your 401k through work, or contribute to an IRA or Roth IRA.
Not Living Within Your Means
Often times, the root of financial insecurity comes from lifestyle and somewhat of a lack of self awareness. Lifestyle expenses are a critical expenditure and as such, they need to be tracked, monitored and adjusted. It is crucial to know exactly how much you’re spending versus your yearly income. Without that knowledge, you could find yourself in real trouble. This isn’t necessarily referring to being house poor either, but more along the lines of habitual, non essential spending. Shopping, vacations–extravagant or too frequent, hobbies, or large luxury purchases can all cause serious financial problems.
Get the information you need, and track what you earn, spend and how you spend it. Speak with a financial planner and set up a strategy, to stay on budget and within your means. Financial success can start as early as today.