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1.
Procrastination. This
is the biggest money mistake of all: putting off until tomorrow what should
have been done yesterday. This is simply financial suicide on the installment
plan.
The cost of delay is very substantial.
2.
Failure to Establish Definite Financial Objectives and Implement a Plan
for Reaching Those Objectives.
People do not plan to fail they simply fail to plan. They fail to set specific
objectives and implement a workable plan for realizing those objectives.
3.
Ignorance of the Time Value of Money. Most
people do not understand the tremendous potential of compounding money over a
period of time. It amazes most people to learn that $10,000 invested every year,
earning 15% interest, can grow to more than $100,000 in 20 years.
4.
Failure to Recognize the Impact of Inflation.
Inflation reduces the purchasing power of dollars over time. The purchasing
power of $100,000 ten years down the road is only $42,241 at an inflation rate
of 9 percent.
5.
Lack of a Clear Understanding of Tax Laws/Failure to Implement Strategies
to Legally Avoid Taxes.
Salaries, profits, property, and estate taxes can be substantially reduced or eliminated
altogether through effective tax planning. Understanding implications of tax
laws can result in fewer dollars making the one-way trip to Washington.
6.
Failure to Diversify Your Investment Portfolio/Taking Unnecessary Investment
Risks.
Each individual must determine his degree of risk tolerance and formulate a
balanced and diversified investment portfolio.
7.
Inadequate Protection Against Unforeseen Losses.
Life, home, health, auto, disability, liability and other forms of insurance are
mandatory today to protect against unforeseen and catastrophic losses.
8.
Letting Family Spending Run Wild. Lack
of discipline in spending habits can cause even the best-laid plans to fail.
9.
Unrealistic Expectations.
It takes time to build an estate. Too many people expect dramatic results too
fast and become disenchanted when get-rich-quick schemes do not materialize.
10.Failure
to Use Professional Advisors.
None of us can expect to live long enough to become expert at everything -
especially the intricacies of efficient financial planning. We need
to surround ourselves with professionals who are specialists in their areas and
rely on a qualified financial planner to coordinate the efforts of the entire
financial team.
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