Almost all individuals have dreams for the future, whether it is a 7-year-old wanting to be an astronaut or a 21-year-old wanting to be a judge. We all have a desire to achieve a goal of some sort in our lives; however, reaching the goal is not a simple task. Before a person can become an astronaut or judge, it is important to take note of the basic goals that need to be met such as purchasing a home.
Most people say that the best things in life are free, but The Flying Lizards were right when they said that they need money. Money can assist in obtaining items to help achieve goals, and the right financial plan can contribute to making money “work for you.” Of course, financial planning is not a simple task, and various factors need to be taken into account.
This article will provide information on the top three financial planning mistakes to avoid, according to a top Los Angeles financial planner.
Not Working According To A Budget
Being aware of your financial situation is essential when developing a strong financial plan with a Los Angeles financial planner. A budget is a highly important factor to take into account when conducting any financial plan because it will help you have an idea of the amount of money you have at your disposal. Furthermore, reviewing and maintaining a budget can ensure that you will be able to set aside extra cash should any financial emergencies arise.
Unfortunately, the majority of young people do not maintain and adhere to budgets. This is due to various reasons, but primarily because they think it is not worth their time. Sadly, by avoiding a budget, it is not possible to “keep an eye” on income and expenses; therefore, it is not possible to learn how much is being spent on entertainment, food, and cable. Without an awareness of these costs, it is impossible to learn where to save and how to cut down on costs.
Using Savings for Non-Emergency Requirements
The majority of people will have a savings account, regardless of how small or large it may be. In many cases, this savings account will be considered a retirement account and beneficial financial planning promote placing small amounts of cash into the account on a monthly basis. Financial planners also advise that you do not use the money avoiding any use of this saving for your retirement years.
Unfortunately, there are emergency situations that may require the use of money in a savings account such as hospital visits or property repairs. In these circumstances, the use of savings can be justified; however, some individuals opt to use savings for non-emergency reasons without replacing the funds. This is a behavior that should be avoided if you are planning on creating a beneficial financial plan.
Setting and Forgetting Financial Investments
The third most common financial planning mistake to avoid is setting and forgetting financial investments. Investing in financial investments can be beneficial, but it is important that you review the investments on a regular basis. This is due to life progresses influencing the investment and potentially minimizing investment potential. To deal with this issue effectively, it is recommended that you contact a certified financial planner.
Thanks to our friend and financial advisor in Los Angeles, Samuel Rad, for his insight on top three financial planning mistakes to avoid. Sam is a Certified Financial Planner in Los Angeles and has a wide range of knowledge about personal financial issues. He has helped many people meet their financial goals.