Money Mistakes

Many people make the mistake of not preparing themselves
for the days or years to come by not paying attention or not being intimately
involved with their finances.

After dozens of meetings with people and reviewing
their financial situations, most are making the same mistakes.

15 Common Money Mistakes

• Failure to establish and maintain credit in each spouse’s name. This is
  a sure way to intensify the trauma of death or divorce. Women on their own
  for the first time in years should ask themselves: "Do I know my credit
  rating?" "Do I have a clear picture of where my assets are located?"
• Failure to organize financial records. Without up-to-date records, you cannot
  plan and are unlikely to take all the tax advantages available.
• Failure to set goals. If you do not know where you are going, how are you
  going to get there? People do not plan to fail-they fail to plan. While the
  average worker has a balance of $47,000 in his or her 401(k) plan, half of
  all participants have $13,000 or less to supplement future Social Security
  payments.
• Failure to invest the money wisely. Surveys find that workers in their 40s
  and 50s invest more than 50 percent of 401(k) money in stock of the company
  where they work. No more than 30 percent should go into stock of their own
  company, recommends Dee Lee, co-author of The Complete Idiot’s Guide to 401(k)
  Plans. Avoid no-interest checking accounts or low-interest passbook accounts.
• Failure to set realistic budgets and failure to "pay yourself first,"
  through a systematic savings method.
• Failure to provide for a rainy day. A fund equal to at least one month’s
  income can mean the difference between inconvenience and serious hardship.
• Failure to have an up-to-date will or trust arrangement. At the same time,
  coordinate the activities of your advisors, such as financial planner, attorney,
  accountant, and banker. If you are alone, make a list of these key associates
  and let a family member or close friend know where it can be found.
• Failure to have proper life insurance. Are you paying too much for coverage
  you have? Do you have enough coverage, or should you have more? Have you considered
  life insurance as a way to fund your estate-tax liability?
• Failure to plan for an emergency disability. What if you get sick or hurt,
  and your employer’s check stops?
• Failure to plan for the future of others. Do you have adequate medical and
  health insurance for other family members? How about long-term health care
  or nursing-home coverage?
• Failure to borrow for the right reasons. Credit-card interest can double
  the cost of an expensive weekend trip, which may be long forgotten by the
  time the bill arrives.
• Failure to hire a competent tax professional. Will he or she review your
  financial activities for their tax impact and actively seek possible additional
  deductions and tax breaks? Will the advisor represent you at an IRS audit
  and strongly defend the position taken on the return?
• Failure to adjust your federal withholding exemptions to increase your net
  cash flow.
• Failure to have a financial planner. Questions to ask: Are my investments
  appropriate in today’s economy? Are my assets titled properly? How would changes
  in my parents’ financial situation impact my financial well-being?
• Failure to act today to correct past mistakes.