As a financial advisor, much of my time is spent urging clients to save for retirement. Saving as much as you can, as early as you can, is one of the best ways to enjoy stable retirement years. But of course, sound financial planning isn’t all about saving money; it’s also about how you spend it. Be on guard for the following three common mistakes, and break bad habits now.
You don’t pay yourself first. When deciding how to spend your hard-earned money, you probably separate items into “need” and “want” categories. Some needs and wants are obvious; your house payment is a need, while a new boat is a want.
Problems occur when people cover a long list of needs, and then a few wants, before working their retirement savings into the “want” category. Paying yourself first is absolutely a necessity, and should be high on your “needs” list. Adjust your payroll withholding to divert money to your retirement account, and you won’t have to constantly fight the urge to let savings slide.
You spend more than you earn. This is a common mistake that many people don’t even realize they’re making! Check out your credit and debit card statements for the past few months, and total your spending. Are you spending more than you make? It is often wise to take advantage of credit card perks like airline miles or points, but you aren’t helping yourself unless you pay off those balances at the end of each month. Once again, it might be time to take another look at your “needs” and “wants” list – and reduce, or cross off, a few items.
You and your spouse don’t talk about money. Many couples fight over money, so you might think you’re protecting your relationship by avoiding “the talk”. Unfortunately, what you’re probably doing is creating a bigger problem in the future. If you don’t talk about money on a regular basis, it can be impossible to know whether your values and your spouse’s values are in line. More importantly, it’s hard to work toward a future together when you don’t know where you’re going!
If you anticipate a disagreement, consider broaching the topic during relationship counseling. Counselors are trained in conflict mediation, and can help you and your spouse reach the necessary compromises without either of you feeling slighted.
For more information on financial planning, call our office to schedule an appointment. We can help you get on the right track working toward a stable future.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.