4 Financial Mistakes And How to Avoid Them

Even though most people don’t realize it, millions of Americans make avoidable financial mistakes every day, and they don’t realize it until it’s too late.

In today’s episode, Sharon J. asks me to share some common mistakes people make and how to avoid them.

Many of these mistakes have been happening for years and continue today!

You will love today’s episode if you want to avoid mistakes that wreak financial havoc.

Summary: Wealth Inside and Out® Podcast – “4 Financial Mistakes And How to Avoid Them”

Today, we will learn:

>>3:47: Understanding and verifying your 1099s are accurate

>>6:55: Earning more money on your savings

>>8:20: Actual example of earnings for a higher rate account

>>9:53: Finding Money

>>11:27: What you need to do annually

>>14:15: What to do before you sign your tax return

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4 Common Financial Mistakes and How to Avoid Them

1. Emotions

Your emotions impact your finances much more than you realize. From how much you earn to your spending, every aspect of your financial health is impacted by how you feel emotionally. Progress in your journey to financial freedom will be difficult without managing your emotions.

Identify and Remove Money Blocks

Removing money blocks is an essential step in reaching your goals. If I had known how crucial removing abundance barriers is to my business and accumulation of wealth, I would have prioritized it earlier in life.

Money blocks can be thoughts, mindsets, and beliefs that get in the way of us achieving our desired goals in life or with money. To learn more about how to identify and remove money blocks, click here.

2. Financial Goals

Many people don’t know how to set clear financial goals because they haven’t been taught how. This can lead to problems like too much debt and insufficient retirement savings. Without clear financial goals, it’s hard to budget, invest smartly, and secure your financial future. Below are some common mistakes. In the podcast, we dive into some additional mistakes.

Not Setting Financial Goals

The first mistake is not setting any financial goals. While most people recognize they want to change their financial situation, many have trouble writing out their goals. This lack of goal clarity makes it difficult to identify the critical actions you need to take to achieve your desired objectives. Setting these goals is a critical step to succeeding.

Examples include:

I save $1,000 monthly for an emergency fund.
This year, I pay off debt beginning with high-interest debt.
I complete a profit and loss each month.

Setting Short Sighted Goals

Another issue that impacts many people is setting short-sighted goals. While setting short-term goals is important and can help motivate you to focus on small wins, it is only part of your plan. By setting short- and long-term goals, you can create a financially secure future you love.

Setting Vague Goals

Another common mistake is setting ambiguous financial goals. A clear vision of what to work for lets you better assess your progress toward those goals. A goal like “I want to save more” is better if you quantify the amount you want to save. For example, a better option is “I save $5,000 in the next three months.”

3. Retirement Planning

Retirement planning can be daunting for even those well-versed in finance, making it difficult for many to begin. This barrier to entry often means people neglect their retirement planning until it is too late. This is a huge mistake because the earlier you start planning for retirement, the better your chance of success. Below are some other common mistakes people make when planning for retirement.

Not Knowing How Much Money You Need

Another critical step is to know how much money you will need. Many people think about a number but are not sure it is accurate. Factors you must consider include your lifestyle, goals, and spending habits. The best strategy to determine your retirement income need is to take a test run before you retire. While there are some commonalities with retirement, most are different, so tailor yours to your needs.

Not Starting Early

Retirement planning is something that ages like a fine wine. The earlier you start investing for retirement, the longer you must let your money grow independently.
Examples of building a secure retirement include:

Tax Advantaged Accounts (IRA, 401k Plans)
Compound Interest
Employee Benefits
Guaranteed Annuities or Income Streams

4. Debt Management

Debt is not ideal, especially in retirement. Many borrow money to buy something they can’t live without. They have good intentions of paying it back, but something else arises, and they need the money.

This is an all-too-common financial mistake, and it can result in you spending your retirement money on debt and interest payments instead of its intended purpose.

Having Bad Debt

Bad debt includes things such as:

Credit Card Debt
High Interest Debt
Aggressive Car Loans

These debts often include high interest. Even if you make your minimum payments, you might be making little to no progress on paying off this debt. It is a financial and emotional drain that affects millions in the US annually.

Missing Payments

This one speaks for itself: missing a payment on any debt is never ideal. Not only does this impact your credit negatively, but it also can allow interest to increase your debt and payments.

Not Taking Advantage of Your Credit Report

It may seem simple, but keeping tabs on your credit health is paramount to having healthy financials. Taking advantage of a free credit report is a great way to check for any fraudulent activity that might be taking place.

Additional Considerations and Mistakes

High yield savings accounts vs. Normal Savings Accounts
Avoid impulse purchases
Follow a budget
Continuing to increase retirement savings
Saving money consistently
Making your emergency savings account a priority
Identify the common money mistakes that impact you (if any)
Take steps to improve your credit score
Compare interest rates on high-yield accounts
Don’t spend more than you earn
Pay off student loans
Check credit card balances and make more than the minimum payment
Set short and long-term financial goals
Create a financial plan for the long run

Conclusion – “4 Financial Mistakes And How to Avoid Them”

Most of us get off course and make financial mistakes. The key is to know where you are going and when you get off course to get back on track. Taking the time to recognize and learn from your past mistakes will dramatically increase your odds of success.

So, there you have it.

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