There are many things that contribute to your financial success, including making a plan, sticking to that plan, and avoiding any big mistakes along the way. Most often, you find financial success long after your journey began and each right turn inched you closer to that goal. However, there are some risks that could potentially derail your path to financial success.
- Not making a plan –Writing down your long and short-term goals and the various things you can do to get closer to those goals is crucially important to your financial success.
- Doing “too much” of one thing – You have your plan written down and sacrifice relaxation and fun in order to get yourself to your end goal. You will be making progress, but the odds of you enjoying every step are very small. If you stick to your plan and feel good about the progress you made, make sure to reward yourself every once and a while. It will feel good and will keep you motivated to continue your plan.
- Letting your emotions influence your decisions – Throughout your financial journey, there are going to be ups and downs that affect your financial life. The market will fluctuate, and yes, some years the market will drop significantly. In this situation, you may be scared about the current market conditions and want to sell in order to save what you can. However, if you have a sound financial plan and you are properly diversified, your portfolio should weather the storm and may come out better a couple years after the down market.
- Being too conservative/aggressive – If you feel you need to make up for lost time or just want to make as much money as you can, you may be overly aggressive and this could hurt you. On the flip side, you may not be very open to risk and become too conservative with your investments. This could hurt you as well. Find a balance between conservative and aggressive.
- Not consulting with a professional – Financial professionals exist for a reason. There are many parts of your finances, taxes, and insurance too complex or difficult to understand. Having a few trustworthy people in your corner can give you peace of mind and could help you tremendously along the way.
- Not reviewing/adjusting your budget – Throughout your life, there are going to be many changes. You could get married and start a family, or you could travel the world. No matter the case, your finances will change with you. Constantly adjusting your budget to accommodate new things and trim spending where applicable is important.
You take many steps in life to achieve financial success. What you do and how you handle these steps could make or break your chances. Avoiding mistakes and regularly checking your progress is essential to moving your finances forward.
Note: The materials provided in this article are opinions from the author and should not be taken as personal financial advice. Please do your due diligence and consult with a financial professional before making any financial decision.