3 Financial Mistakes to Avoid in 2018!
The New Year is coming and it’s a great time to re-evaluate your finances. Are you on track to achieve your goals this year?
As you start to plan for 2018, be mindful of these 3 financial wrecking balls:
1. Financial denial / oblivion
Have you ever heard the phrase “the first step to recovery is admitting you have a problem”? Well, the first step to getting your financial life together is knowing what your financial situation is. When it comes to your finances, don’t be oblivious!
It’s not too complicated, but will require you to sit down (perhaps with your holiday drink of choice) and be honest with yourself about where you’re at financially. If you’re married, do this with your spouse.
How much total debt do you have?
What interest rate are you paying on your debt?
Do you know how much you have saved for retirement?
Do you know how much you actually make (after taxes)?
While these are all relatively simple questions, you would be surprised how many people can’t answer them!
When you finish your reality check, you should be able to answer the following:
Total Savings (non-retirement)
Total Savings (retirement)
Total Monthly Income (After Taxes)
These are the basics. How do your numbers match up with your goals? Are you on track?
2. Commercial debt
The average American household has over $8,000 in credit card debt. Credit card debt is accompanied by high interest rates which can drastically impact a financial plan. In short, you’re throwing away money. All the money you are paying in interest can, and should be, in your pocket instead. Start off 2018 with a plan to pay down/off your credit cards.
Side note: Credit cards aren’t all doom and gloom. I use them for almost everything and pay the balance off each month. No interest. Instead, I maximize reward points. Thanks for the free money!
If you don’t have credit card debt, pat yourself on the back. Now, let’s see how you’re doing on number 3.
3. Putting off saving for retirement
Every day you wait to start saving for retirement you miss out on the power of time to grow your money.
We are really good at coming up with excuses why now isn’t a good time to set aside money for retirement. I’ll let you in on a little secret. Whether you are 21 or 41, now is the time to start saving for retirement (assuming you have your other financial ducks in a row). You can’t get this time back!
Take advantage of the tax benefits of your company 401k or an individual ROTH IRA. If you’re in a position to contribute and your company offers a 401k contribution match, you need to start contributing yesterday. Integrate retirement savings into your financial plan, be patient and enjoy the mental peace of knowing you’re setup for later in life.
For some people, retirement savings is a tough pill to swallow. Don’t fall victim to another year of retirement planning procrastination. 2018 is your year!
The Wealth Hound