5 Common Financial Planning Mistakes

Appropriate time and method to begin

If you started saving money at your early age, then that is good. Although it takes time before you can save larger amount of money. But as time goes by, it’ll make an improvement of savings. However, it is good to start early. When deciding to begin financial planning by 30’s or 40’s, the amount you will need to save will only keep rising.

Aggressive saving is not good. You have to strike a good balance among all these factors

The best time to plant a tree was 20 years ago. The second best time is now. Remember this.

Dismissing from mind about inflation

This topic is commonly one of the most financial planning errors. Quite often, a lot of people tend to overlook inflation rate altogether. As it is hard to expect too many years into the future, that is why retirement plants are mostly afflicted by this.

After all, it’s not an excuse. You won’t be amazed to find out that in some circumstances, the inflation rate is higher than the investment return rate. It only means that even if you receive interest, your actual profits will be negative.

This is the reason why you have to keep in mind about the importance of inflation. Your savings will be destroyed slowly but steadily.

Disregarding the true value of insurance

Insurance helps save the tax, which is the most people only care about, well some of them. You are wrong in making a financial decision to buy an insurance policy just to save tax. It is the worst financial decision ever.

It is very important to know what your insurance can cover aside from helping you save the tax. Just put the need to buy insurance over the tax benefits it bids and only then invest in it.

Spend first, save later

This is one of the mistaken beliefs of people nowadays. Think of it, you are enjoying your shopping today, but your credit cards are on a wreck. And then worry it in the future. It’s time to buckle up. Save first, spend later!

It’s time for you to be wise and do the contradictory. Always remember that the rich and wise save first and spend later.

Planning and preparing

Planning ahead of time really matters. It is bringing the future in to the present so you can do something about it now. Be it for retirement, for your children’s education and health, wedding or investment, you should acknowledge it.

Do not oversight the emergencies. It still matters because financial emergencies come unwelcomed. So obviously, you have to be prepared for it.