Commonly, when looking at the role financial planning can play in our lives, it’s understood that it helps us make informed financial decisions to achieve success and reach our individual financial goals.
When you hear about financial planning, you probably only hear about what should be done in order to attain success and reach your financial goals. It’s so often that people hear about the dos that we regularly don’t talk about the don’ts.
Financial planning mistakes happen often – by so many of us… But they are so often easily avoidable as well!
It’s important that you are informed of the financial planning mistakes that are most commonly made, so you can avoid them before it’s too late. Usually, you don’t learn of these mistakes until the damage has been done and often can’t be reversed.
It’s better to have an assessment and seek out financial advice while it’s still early. That way, you can avoid certain errors like these:
1) Lacking a Present Plan
Having a regular plan used on a daily, weekly, or even monthly basis can help you track and manage your finances.
Often, people who lack a financial plan come to realise the negative impact at a later time in their life and usually regret it. While it’s never too late to start mapping out your finances and learning how to manage them better, it’s more beneficial to start planning earlier in your life so you have a better chance of achieving your financial goals.
Many financial goals require a long-term strategy such as investing or budgeting. By having a plan in place, you can also limit overspending money you may not have. On the other hand, you may find that you have money that could be better spent to have a more positive financial impact on your life.
Seeking a financial adviser can help you:
- Determine your financial goals.
- Construct a financial plan that can help you achieve these goals.
2) Refusing to Save
Failing or refusing to save up some money may be a conscious decision. Other times, it may be an inevitable one where you haven’t thought about the multiple benefits it can have to your future.
It’s never too early to start thinking about your ideal retirement lifestyle. Usually, you’ll find that you are going to need quite a large sum of money in order to achieve this ideal lifestyle. Saving small amounts per week and contributing that money to your superannuation can make a significant impact on your retirement savings later in life.
Additionally, saving money is a great way to offer you small rewards in the short-term. Rather than overspending and impulse buying for instant gratification, saving money may provide you with more rewarding goals, such as buying a property investment -which in time will increase your savings.
Instead of looking for gratification right now, try to find a balance and motivate yourself to put away what you can.
3) Forgetting to Ask Experts
Financial planning isn’t something that you have to be doing by yourself. Although it’s good to start planning when you can, it’s better to gain advice where possible.
Start by asking family and friends and if you’re looking to make big, complex financial decisions, chat with a financial planner.
By getting a second opinion from a financial advisor, you’d be able to gain better insight into how you can better manage your finances and make the most out of them.
Plus, keep in mind that financial planning is something that concerns you and your loved ones. It’s best to be transparent with your partner and family members of age to avoid any conflicts or discrepancies that can negatively impact your relationships later in life.
4) Review Your Financial Plan, Budget and Financial Situation
Life changes. Your priorities change and your financial position changes over time.
It’s important to take the time to review your current financial strategies to check if they are still working for you and your family.
Financial planning is not a set-and-forget approach.
- If you have a budget and savings plan, check to see if you could be saving more.
- If you have investments, it’s important to keep up-to-date with the market and your investments’ performance.
- If you hold life insurance policies and have a family, do you need to change your level of cover?
A financial advisor can help you regularly review these things as well as provide you with a review of the relevant tax regulations and an overview of the market you’re concerned about to create a plan ahead of time.
5) Putting off Future Plans
Another common financial planning mistake is that some people are paying attention only to the present, putting off any thoughts or plans for the future. However, that’s how most people end up without any goals.
Financial advisors may be able to guide you through the different elements of preparing for the future, like retirement planning and estate planning.
Understanding the common mistakes that are apparent when it comes to financial planning will provide you with a better chance of financial freedom later in life.
With adequate advice and guidance, you’re sure to set yourself up for success.
If you are seeking financial planning services like ethical investing, retirement planning, to wealth management in Brisbane, book your consultation with us and see how we can help grow your wealth in more ways than one.
CB Wealth Australian Pty Ltd T/As HH Wealth is a Corporate Authorised Representative (No. 1283595) of Axies Pty Ltd ABN 38 136 704 446 AFSL No 339 384. Chris Holme is an Authorised Representative (No. 1004793) of Axies Pty Ltd ABN 38 136 704 446 AFSL No 339384. Our Financial Services Guide (FSG) and Adviser Profile contains important information about Insight Investment Services Pty. Ltd., any authorisations and the services we provide. The following link will take you to an electronic copy of the FSG, if you would prefer to receive it another way please contact our office. FSG HERE>