Mar

9

Five Common Financial Planning Mistakes

Posted In: Personal Finance

When it comes to planning for your future, there are many paths that can lead towards greater rewards, and there are many paths, or should I say mistakes, that people follow which don’t offer as much benefit. Below is a list of the five most common financial planning mistakes that people make after, or during, parenting and before planning for retirement.

(i) Not setting enough money aside for retirement. The longer you wait to save for your retirement, the less money you will have set aside in your so-called “nest egg”. Put as much money as you can afford towards your 401k plan, and at the very least, try to contribute the maximum your company will match.

(ii) Postponing saving money for college funding. Many people make the mistake of counting on financial aid to pay for college, but the majority of financial aid funds come in the form of loans. In other words, this is money that needs to be repaid (usually after graduation).

(iii) Buying inadequate life insurance. The only thing worse than paying for inadequate life insurance, is not having any insurance at all. Life insurance is very affordable, and can make all the difference in the world for the child of a life insurance policy holder. Funeral expenses are never planned for, but with life insurance these fees will be much more manageable.

(iv) Failure to create a will. When a parent passes away without a will, the state will often determine the well-being of the children, and often who will manage the estate’s financial situation. At the very least, it should be known amongst immediate family members what the deceased wish’s are, so informally write-down a will and talk to family members.

(v) Overlooking the need for disability insurance. Too often people are injured in accidents that don’t claim their lives, but leave the victim in a disabled condition. Plan to insure yourself for around sixty percent of what your income currently is.

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Article Source: Five Common Financial Planning Mistakes