Personal Financial Planning can easily overwhelm the uninitiated. While some have the ability to pull ahead of the crowd and maximise the returns on their earnings, often hard-working families/individuals loose out by missing opportunities which could potentially be a game changer.
The financial planning services industry is saturated with providers and solutions. In a world where the sheer volume of information on the subject can confuse and cloud your decision making abilities, here are a few common mistakes to avoid when planning out your finances.
1. Not Planning:
It comes as no surprise, but at the very core a conscious decision needs to be taken to Plan and Budget your finances. While we can easy spend 20+ hours a week on our computers or watching TV, setting aside 2 hours a week to do your Budgets usually proves daunting.
2. No Insurance:
Shying away from investing in Insurance is easy, especially as a young adult. Medical emergencies or worse are never thought of as something that could happen to you. Insurance protects you and any dependants from such an eventuality. Insurance plans can also be chosen which offer you a more complete solution, mostly tax exempt. The nature of Insurance makes it a favourite amongst first time investors in India.
3. Not Saving:
Think of savings as paying yourself. It could be a modest percentage of your total income every month, but putting away some money every pay check allows you to build a corpus to utilise towards a passion project, a travel aspiration or any other craving you might have DEBT free.
4. No Goals
As your portfolio expands and your investments begin to mature, having a clear goal/expectation from each ensures you know when double-down, or when to pull out. Goals once achieved also tends to give you a particular sense of satisfaction, and gives you the confidence to continue on your path towards financial freedom.
5. Being too Risk-averse or Risk-keen
A well balanced Investment portfolio is critical to healthy finances. Investing purely in long-term, low return options makes for a pleasant future at the cost of a happy present. Conversely, Investing only in the high-risk short term snatches the safety net and could potential be a catastrophic mistake. Most Investment advice is centred on balancing these two investment avenues, and a level headed approach ensure dynamic returns in the short-term with a strong long-term plan providing peace of mind.
My Insurance Club food for thought:
Personal finances are sometimes overlooked in our busy lives, but continues to prove invaluable to achieve financial freedom. With various success stories to draw inspiration from, and ample information available easily for those who show interest means today more than ever we have the tools needed to make smart decisions and maximise benefits.
Steering clear of common mistakes and making the right decision at the right time can be the difference between financial freedom and financial ruin. A calculating and informed Investor today has the potential to achieve their financial goals and ultimately reap the benefits of their hard-work and time.
Image Credit: Pluswealthadvisor