6 Financial Planning Mistakes You Should STOP Making

If you’re already planning for your financial future, you know that it is more of a marathon than a sprint. Making and sticking to a financial plan is a journey of decisions both big and small, and it takes TIME to reach financial freedom.

Along that journey, it can be easy to get comfortable and slip into some bad habits. So, let’s look at some financial planning mistakes to avoid on your way to financial success.

Mistake #1: Having an Unclear Plan

The first step in any financial planning process is going to be making sure you have a solid and clear plan to begin with. This means distinguishing your financial goals, your saving needs, and what you want from your life after retirement, and then establishing a plan that makes those dreams possible.

The strength of your plan is in the details. Once you work through all of the little details to come up with a comprehensive plan, your journey can really begin.

Mistake #2: Having a Narrow Definition of “Saving”

An emergency savings fund and retirement savings plan are key factors to include in your financial plan, but they shouldn’t be it for you! Many people fall into a trap of not saving up for other types of things that are bound to come up.

List possible expenses like emergency healthcare costs, pet/child needs, home repairs and renovations, vehicle purchasing and maintenance, and make sure you’re setting funds aside for each. Without saving for these types of expenses, they can easily mess with other aspects of your financial plan and cause you to go through a financial hardship.

Mistake #3: Failing to Consistently Save

No matter what stage of life you are in, if you have a source of income, you should be saving. It can be easy to slip into patterns of avoiding general saving when you have big ticket items you’re focused on, but make sure that you are always contributing SOME amount to your savings accounts. 

The savings plan you have in place is really up to you. You can put aside a certain percentage of your income or a set amount each week, month, or year as long as you’re saving in some capacity.

Mistake #4: Counting on Social Security Benefits

While social security is something most people can tap into, later in life, you shouldn’t rely on it as your sole source of financial support post-retirement. By accounting for this in your retirement plan now, you can avoid getting stuck later in life. 

One way to do this is to plan as if social security is not a factor - and if you’re still able to receive benefits down the road, you’ll simply be in an even better spot than you initially expected!

Read this article for some helpful myths/facts about Social Security benefits. 

Mistake #5: Keeping Your Plan to Yourself

For most, the motivation behind their commitment to financial planning is wanting to set themselves and their loved ones up for financial freedom. This means that some of the fruits of their labor will be in the form of assets left to the various beneficiaries they leave behind. Make sure that your beneficiaries know this! 

Your financial plan likely includes instructions for once you have passed, and it’s important to make sure that the loved ones you leave behind know what steps you’ve put in place and how they can help bring them to fruition.

Mistake #6: Not Updating Your Financial Plan

As we said before, financial planning is a marathon not a race. While it’s important to stick to the financial plan that you make, it is equally as important to reevaluate that plan and make sure it’s serving you and your lifestyle. As time passes, your goals and priorities may shift, and that means your financial plan should shift as well. 

You and your financial professional should collaborate with regular check-ins and adjustments. This means your financial plan could change over time.

Want to avoid these costly mistakes?

Working with a financial professional that you trust is so incredibly valuable when it comes to avoiding these common financial planning mistakes! Financial planning is a huge task to take on without the guidance of a professional, and you need one that’s in it for the long haul. 

At Gretchen Rehm Financial, our team is here to work alongside you to not only establish a financial plan, but to see it through to the end with you. We love seeing our clients achieve their financial goals and make huge strides in their path to financial success! Book an appointment with a team member for help with your financial planning needs.