I made these financial planning mistakes and I regret them
I've been in the world of finance for a while now. I've seen good and bad financial planners, financial advisors, and all people offering their advice. I've even been through my fair share of financial planning mistakes.
Here are some of the biggest ones:
I didn't start saving early enough.
The first step in making your finances work for you is saving early and often. While there's no magic number, many financial experts recommend setting aside at least 10% of your monthly income in an emergency fund — and many people aim to save 20%. Once you have that amount saved, start setting aside additional money for long-term goals like retirement.
I didn't save enough in an emergency fund.
An emergency fund is a savings account you set up for unexpected expenses. The best method to manage this is by setting up automatic transfers from other accounts into the one you're saving for—if you don't, you'll never know when your money should be going there!
You can save up more than three months' worth of living costs if necessary; the key here is that whatever amount will ensure that if something catastrophic happens, those funds won't run out immediately due to the lack of interest payments on them.
I didn't put my retirement savings on autopilot.
If you're not putting your retirement savings on autopilot, you're leaving money on the table. You'll still have to contribute regularly—but as long as you stick with it, it should work out just fine.
To save money on taxes, I purchased a life insurance policy.
Life insurance is an excellent tool for saving taxes, but it's not worth the price if you don't need it and have no dependents to support it.
Life insurance is only worth buying if you're married or in a long-term relationship with someone who will be dependent on your income after your death. If not, consider using other retirement savings options instead of buying life insurance based on how much money you need at this moment in time.
I change jobs every year to increase my salary
You can't control what happens in the economy, but you can control what happens to your finances. Take whatever job offer you receive! If not, keep looking and be ready to quit if that's the case—it's not worth sacrificing your financial future for something that isn't working out anyway.
With some planning, you can avoid declining your quality of life later on and not have financial regrets.
- Save money to invest in yourself.
- Save money to invest in your future.
- Save money to invest in your family.
- Save money to invest in your business and community.
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