Common Financial Planning Mistakes People Make With Their Money | Kerr Financial
Financial Planning
Common financial planning mistakes people make with their money
Category: Financial Planning

Building financial security involves more than investing.  We have found some of the more common mistakes are:

  1. Looking for a quick fix instead of a long-term strategy. Remember: the quest for financial security is a marathon, not a sprint.
  2. Confusing financial planning with investing. Investing is just one part of financial planning. There’s also tax, insurance, retirement, and estate planning, as well as debt and cash flow management. For many people, it also includes planning for their children’s education and even finding the best way to finance a home, car, or business.
  3. Not setting measurable financial goals. You must know where you want to go to determine the capital and average annual return you’ll require. Plus, progress checks can help you manage the risk level of your portfolio.
  4. Neglecting to evaluate their financial plan periodically. Review your plan at least annually and after any major change in your life.
  5. Thinking financial planning is the same as retirement planning. Financial planning should address every stage of life. It’s about directing your money and career to meet both current and future needs.
  6. Expecting unrealistic returns on investments. This is a huge problem.  You should be aware of the asset mix in your portfolio and the target return for that mix.  This would be discussed with your investment advisor and should be monitored annually.
  7. Being afraid of planning, or not planning in general. Many people are intimidated by the math and wide range of investments. Others assume that tax and insurance planning are too boring to worry about until they’re much older. As with any field based on specialized knowledge, working with a professional is one of the most effective solutions.
  8. Not realizing that a financial plan is only as good as the information on which it is based. To receive appropriate advice, you need to come forward with accurate, up-to-date information about your holdings, current lifestyle, goals, and constraints. Otherwise, your portfolio could wind up being too aggressive or too conservative, or even in conflict with assets held elsewhere, such as in your retirement plan at work.
  9. Not understanding how advisors are compensated. No one format is inherently good or bad. What’s important is to understand what you’re paying for and feel comfortable that you’re getting fair value.
  10. Being a “passenger” instead of a “driver”. A personal financial plan isn’t just a product that you purchase and then throw away when you’re done. It’s a process – one that works best when you take an active role.
Kerr Financial

About Kerr

Kerr Financial Group was formed in 1979 for the purpose of assisting individuals to maximize their personal financial resources, alleviate their financial and retirement concerns and simplify the administration of their affairs.

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