Are You Guilty of These Financial Mistakes?

When it comes to personal finance so many people bury their head in the sand. They make mistake after mistake never learning from them. Face up to those mistakes, grow from them and prosper. Don't feel bad, even the brightest of people mess up once and awhile. All of us have gone "Doooh!" at one time or another. Here are a few common financial mistakes you could be making. Recognizing them is the 1st step toward correcting them. Taking action would be the second step.

Not Having a Financial Plan
Success with money begins with treating your finances similar to a business. Every business starts with a plan and so should you. Every business tries to operate at a profit and so should you. This means creating a budget and adhering to it. It means setting goals with your money along with your investments. This ought to be a written plan which is reviewed every quarter so you stay on track. You might want to use a financial planner do this for you. Using a financial planner makes it much simpler to stay the course, but make sure the planner has your best interest at heart.

Investing in Things You Don't Understand
Keep your investments simple. If your portfolio includes assets that only a hedge fund manager would understand, then it's time for you to get out. Stick with the tried and true like stocks, bonds, and mutual funds. Don't get swayed by the online courses attempting to teach you to make millions though trading. It's a great way to go broke in a hurry. Manage your risk by diversifying or buying good companies inexpensively.

Financing Everything
Don't finance things or run up credit cards. If you can't afford to pay cash for it then you can't afford to get it. It seems like no big problem to add on another $100 per month in financing, but if you lose your wages, you still have to cover. Each time you include a monthly payment, you add another link to your chain of bondage. Do you really want to live a lifetime of slavery?

Not Having Back up For Emergencies
Start learning to save a part of income for back up. Invest in low risk securities so that it's there when it's needed. It's also good to get in the practice of keeping windfalls rather than spending them. You should have a minimum of several months of salary as support.

Too Little or Too Much Insurance
You ought to have insurance for all of the main things like home, auto, life, health and income. If a possible loss would spark a financial disaster for you, then you definitely should have insurance for it. Conversely, you don't need to insure every little thing like auto repair or your pet. These losses are recoverable without too much sacrifice.

Not Saving for Retirement
Not taking advantage of a 401k and/or a company match is probably the biggest mistakes people make. 401ks are the most useful investment vehicle available for retirement, but shouldn't become your only means. If you can, you should also invest for income like dividend paying stocks, bonds or real estate. That way you aren't drawing down your 401k just to meet monthly expenses, but it's there when you need it.
This is by no means a comprehensive list, but looking after these things will put you back on track to a better financial life.

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