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The financial decisions you will regret forever

Making poor financial choices is something that most everyone will make in their lifetime however, a few financial decision you might regret forever.  There are a few financial mistakes that should be avoided because there is no easy way to remedy the situation if you make these mistakes.
Why do most people make financial decisions that they will regret?
The primary reason is that they lack knowledge of other options or they don’t understand the long term consequences of the decision. Most of us make important financial decision on a very short term planning horizon.
What are a few of the decisions that people make that they will eventually regret?
Putting off saving for retirement, only paying the minimum on credit cards, borrowing from your 401k,  bankrolling your kids and not seeking professional advice are just a sampling of the decisions that can cause long term financial ruin.
Why is saving for retirement early so important?
The sooner you start saving aggressively for retirement, the less you will have to save each month. Waiting until you are 45 instead of starting at 25 to save for retirement could mean you need to save nearly 4 times more per month.
How does only paying the minimum on credit cards become a poor decision?
It’s a twofold problem. One, you will pay a considerable amount of interest if you pay only the minimum each month and the second issue is if you keep paying only the minimum, your credit card debt will very likely spiral out of control.
What are the major consequences of borrowing from your 401k?
First, you are reducing or suspending new contributions which means you might miss some or all of the company match.  Secondly, your investment isn’t growing on the portion that you borrowed and from a lack of contributions, finally, you are paying interest on the loan with after tax dollars which means you lose some of your tax benefits each year.
Where do parents go wrong with helping their kids financially?
There are so many ways and stems from wanting your kids to have the best of everything.  From buying a new first car, paying for private college tuition or the expensive wedding, parents can set a pattern of footing the bill for everything at any cost.  This often comes at the expense of retirement savings which can be a disaster for the parents.
What are times that people should seek professional advice?
The most common would be for investment advice but really there are many more. Tax accountants and lawyers are important advisors to consult from current tax strategies to longer term estate planning. Seeking advice when starting or investing a business is also an important time to get professional advice.

Posted: 8/29/2016 with 0 comments

Categories: Credit, Financial, Money Matters, Planning, Retirement

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