The 3 Biggest Financial Mistakes I See
By Timothy Brown, MBA, CFA®, CFP®, RICP®, AIF®
If there’s something everyone can agree on, it’s that there’s more than enough resources on money management available both online and offline. These pieces of general advice are often helpful in guiding the decisions you make for yourself and your family. However, the reality is that most people don’t go beyond that. Many people underestimate the power of a trusted advisor who can provide you clarity through the most difficult situations.
This is why you need to establish smart habits that contribute to a healthy financial life, such as automating your savings, controlling your spending, keeping a budget, and speaking with a professional. Once all of these and more are in place, the likelihood of a successful financial situation is increased. So if you want to be enlightened about the three biggest financial mistakes you should avoid, keep reading.
1. NOT ADEQUATELY MANAGING YOUR INCOME
Not understanding the idea behind properly managing your income is one of the biggest mistakes people make. As a matter of fact, it’s a recipe for disaster. Many people end up overspending their cash and credit cards while failing to budget their expenses, which creates an even larger mess.
It’s important to familiarize yourself with habits such as creating a budget, reducing spending on discretionary expenses, and saving a portion of your income every month. This will ensure that you always have money to fall back on; whether it’s a home repair, car emergency, or medical bill, you can rest assured that you can bail yourself out.
2. NEGLECTING YOUR FINANCIAL GOALS
We all have financial goals that are important to us. But somehow we aren’t great at playing the long game of saving and investing to achieve them. Sometimes we need money now, and that’s what distracts us from the goals we need to accomplish down the road. If you’re not disciplined about your financial situation, it’s quite easy to get distracted and lose focus.
To help you stay focused, set small financial goals that gradually add up to larger milestones. Also, make sure to always set aside your emotions when dealing with money. Address your feelings of insecurity, anxiety, and fear by speaking with someone you trust, so you can stay focused on what’s really important to you.
3. FORGETTING ABOUT YOUR TAXES
Taxes are undoubtedly one of the biggest expenses that come during retirement. Therefore, to avoid huge financial mistakes, ensure that you are proactive when it comes to your taxes. Know what counts as taxable income so you can report it on your tax returns. When you fail to report your income or pay your taxes altogether, you can run into an entirely different set of problems.
Additionally, take the time to plan your taxes and always ensure that you know the tax implications before making any financial decisions. Whether you’re deciding between a traditional IRA or Roth, consult with a tax professional and remember that taxes will always be a factor in your financial situation.
WE’RE HERE TO HELP
If you need a plan to keep you on the right track, we at Brown Wealth Management are happy to take you up as our client. We will help you find the right strategies to match your financial situation and provide the tools to help you avoid the big mistakes. Schedule a free introductory call today by reaching out to us at (952) 303-6715 or https://www.brownwealth.com/getting-started.
Timothy Brown is founder and president of Brown Wealth Management, an independent, full-service wealth management company that helps individuals and families prepare for all of life’s milestones and events. With more than 20 years of experience in the financial industry, Tim strives to help his clients live happier, more fulfilling lives with the confidence that they have been good stewards of their finances. Tim has a bachelor’s degree in finance and accounting from the University of Colorado and an MBA from the University of Minnesota’s Carlson School of Management. In addition, he holds a rare combination of credentials: Certified Financial Planner™(CFP®), Chartered Financial Analyst™ (CFA®), AIF® - Accredited Investment Fiduciary™ (AIF®), and Retirement Income Certified Professional® (RIPC®). Tim has been recognized for his hard work by receiving the Five Star Wealth Manager award in both the Mpls.St.Paul Magazine and Twin Cities business magazine since 2013.
When he’s not working, Tim enjoys spending time in Eden Prairie with his wife, Stacey, and their four children. You can often find him keeping busy by staying fit, pursuing a black belt in Tae Kwon Do with his three boys, assisting kids with Boy Scouts, and attempting to read two books per month. To learn more about Tim, connect with him on LinkedIn.