Financial planning advise

Common financial planning mistakes to avoid in 2018

Financial planning is one route that helps you to identify where you currently stand financially, and where you want to be. We all dream of fulfilling our goals for the future. Whether it is about buying your first home or starting your own business, money is probably the biggest concern. Your financial plan is one tool that helps you get from where you are to where you dream to be in. So in an effort to get your financial plan into tip-top shape, here’s a guide to the steps that you should avoid:

Not setting a budget

Assuming that you have enough or knowing that you don’t, isn’t a reason for you to not maintain a budget. After keeping a track on your budget for a few months, you may be surprised to know how much you spend on your cable bill, travelling expenses and other miscellaneous things. Maintaining and constantly monitoring your budget can help you to ensure keeping aside extra cash in a scenario of financial strain. The thumb rule here is to have savings worth of three to six months of your living expenses.

Utilising your retirement savings for non-emergency needs

Withdrawing money from you retirement savings is like borrowing from your future needs for paying your current expenses. Unfortunately, emergencies do not come with prior intimation and no matter how much careful we are with our finances, hospital visits, job layoffs and home repairs occur when you least expect it. For such situations, it’s safe to build an emergency fund.

Financial planning mistakes

Not reviewing your Investments periodically

It is vital for you to constantly review your investments in order to refrain from forgetting them. One, your capacity to take risk with respect to investments changes over a period of time; usually it’s higher when you’re young. Two, as you age, your investments and goals need to be upgraded in order to align with changes such as new jobs, family, responsibilities, etc.

Delaying saving for future

As quickly as you’re eligible to save, be sure to take advantage of any retirement plan being offered by your employer that will help you to contribute for your future. The longer you wait to save, the harder it is to retire with comfort. The sooner you start in your young age, the more time you’ll have to multiply your wealth.

Don’t just be an interested investor, be a committed one

Being committed and consistent with your investments help you to understand your current financial position, and the gaps you could fill in, to strive towards your goals. If you want to chase after money, it’s time for you to think beyond being an interested investor, and implement plans accordingly.

Being an investor requires immense patience, planning and consistency. All these factors work hand in hand, only if you have money and confidence to stand strong about your financial plans. As a tip, diversify your investments; focus on balancing your risks and ensure long-term gain.

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