We all have made mistakes with our money and many times in hindsight wish we would have done things differently.
In this episode, you will learn about the top 2 money mistakes people make.
- Magical thinking
- Financial Dependency
Magical thinking leads people to be overly confident and optimistic of the future without doing any really planning and thinking. Its a lot of hope and wishful thinking. This ultimately leads to poor choices.
How magical thinking can appear
- Company stock as your only investment OR to big a portion
- Penalty Withdrawals
- 10% penalty on early withdrawals before 59.5. Exceptions are there and I discussed a few in my episode #20 – How to access retirement money prior to 59.5
- Lottery Tickets or any kind of gambling
- Waiting for the inheritance aka the windfall (the ship to come in)
- Bernie Madhoff aka ponzi scheme
- Money affirmations alone will make me rich
- The universe will provide
- Action is needed.
- Thinking you have enough money to retire or confident that you’re on the right track without running the numbers and having a plan
- The only live once thinking. The I will get to get later mindset. Not thinking of the future self and how much pain it will be by not planning and delaying gratification now. Ill save later when I make more money and/or when I have less expenses
- 401k is free right?
- Not knowing what your paying
- Paying just 1 percent in fees could cost you nearly $600,000 over 40 years
- Thining your retirement years won’t be very long
- Not factoring in inflation – the biggest barrier / enemy
- Relying to much on Social Security
- The market will go up every year
- Home as your only investment – home equity
What does financial dependency look like? It can take many different shapes and forms. It can be in many different degrees and developmental stages.
- You have never completely supported yourself on your own.
- You lack even the most basic financial know-how, such as how to balance a checkbook or read a bank statement, or pay a bill, apply for a loan, get insurance
- You’re in a physically or verbally abusive relationship, or you’re simply unhappy with your living situation, but you worry you won’t be able to support yourself if you leave.
- You lack self-confidence and ambition and have little sense of purpose in your life.
- You have no idea what your family income level, net worth or cash flow is.
- Not knowing what your paying – to high?
- No Plan for debt, housing, car, college, kids
How to turn the ship around if you think you’re going in the wrong direction, if your not sure, or even if you want to accelerate your path in the right direction.
- Take action towards what you want and understand that its going to take persistence and patience to get it.
- Investment 20% or more
- Delay gratification so your future self can live better instead of worse than how you live today
- Read at least 1 book a quarter on money.
Call to Action
- Make a plan to improve your financial situation TODAY. Do it today, don’t push it to tomorrow. The plan to start could be making a plan on what books you plan on reading this year.