Hey, everyone, I hope this video finds you well as always.
I’m asked frequently about the most common financial planning mistakes I’ve seen in my 30 year career, and although I don’t give retail advice, I chose the three most common that I think are easily rectifiable and everyone will understand.
So the first most common mistake I see is living within your means. I have friends and family members who spend way more than they should and they know it. Sometimes it’s ego. Sometimes it’s status. Driving the right car, living in the right neighborhood.
Try to live within your means. My grandpa used to say, if you don’t have the money to pay for it, don’t buy it, don’t put it on plastic. And yet we’ve really grown accustomed to using those cards. And now in the last two years with COVID, lots of places didn’t even take cash. It’s even easier to spend money. So be careful with that. Live within your means.
Which leads to my second most common mistake. Not paying yourself first. Treat your savings or your retirement or your emergency fund like a utility bill. You make sure you make your car payment, you make sure you pay the phone bill, you make sure you take care of the electricity bill. Make sure you’re saving for retirement first before you spend other money.
I’ll give you two examples. If you have access to a 401K and that 401K has a match by your employer to whatever your percentage of your match of the contribution, make sure you’re at least contributing up to that match. Take care of that free money.
If you have an emergency fund or a savings account, make sure that when your paycheck is deposited to your account, you’re automatically doing an automatic transfer into that savings or emergency fund, whether it’s $2 a month, $5 a week,$100 a month, $3,000 a month save, save, save and save first.
And finally, seek out professional advice. Financial planning is incredibly confusing and it has a lot of tentacles and it has a lot of ramifications if you do it incorrectly, so find a financial professional to answer your questions and provide you solutions.
I wish you luck. Take care.