THE TOP MISTAKES THAT PEOPLE MAKE WITH THEIR MONEY.
As Liza Minnelli once famously sang; “Money makes the world go round.”
She’s right of course.
Whether you love it or hate it, without money, we simply couldn’t get by in life. We like to pretend that money won’t solve all problems, but it can certainly help and there is no escaping the fact that a lack of money will undoubtedly cause problems.
But what money is really important for, is not ‘things’ but ‘freedom’. It’s a fine line though, as freedom is closely linked to ‘freedom to buy (or do) things.’
It’s always the important things in life that have the greatest potential for mistakes – relationships, career choices, and so on; so, given that money is so important, it’s understandable to see how it’s possible to make mistakes with it.
MISTAKE 1: NOT ALIGNING WHAT YOU WANT TO DO WITH YOUR MONEY WITH WHAT’S IMPORTANT TO YOU.
While in life we are taught to believe that it’s not about the destination, but the journey, with money, the opposite could be said. It’s easy to put too much of a focus on the journey. How will you get your money? How can you get as much as possible? But without knowing what you want to do when you have enough money, how will you ever know if you do, in fact, have enough money? If you have clear goals and a vision for your life, you have something to strive towards and you won’t run as great a risk of overworking and not realising when you have got to the point where you can sit back and reap the rewards. Money should not be the goal. It should be a means to achieve the goal.
MISTAKE 2: NOT RECOGNISING HOW MUCH MONEY IS ENOUGH
It’s easy to fall into the trap of over worrying about running out of money. After all, there are bills to pay, families to support and a retirement to fund in the future. And that’s before we start to look at the ‘fun’ stuff, like holidays. Do you really want to look back on your life , realise you have more than you will ever need in the bank, and wish you had stepped off the hamster wheel sooner so that you could have spent more time enjoying the things you wanted to do? By realistically looking at what you want from life, you can determine the maximum you will ever need – and why would you keep going beyond that if it means missing out on the fun of actually living it?
MISTAKE 3: PLANNING TOO MUCH FOR THE FUTURE
You read that right. Planning for the future is, of course, one of the most important things you can do, but not if it means missing out on the here and now. It’s easy to fall into the trap of ‘someday…’
‘Someday I’ll get married…’
‘Someday I’ll travel to the country I’ve always longed to explore…’
‘Someday I’ll buy myself that nice car…’
… but days are not guaranteed and sadly, ‘someday’ may never come. Certain things are not going to be practical until retirement, but there are other things that you could enjoy now and, if planned for properly, there’s no reason why you shouldn’t.
Through lifestyle financial planning we help clients determine what they want from life, both now, and in the future. Then we sit down with them to develop a realistic plan to help them get there.
This article does not constitute financial advice and should not be construed as such.