03/10/2020
From the people I have come across, here are a few common Financial Planning blunders they make:
❌ Heaps Of Credit Card Debt
Most millennials use their credit card on things they do not require or overspend thinking that they can pay it off later. A credit card is a tool to help gain time, but it is not something to be used for essentials or luxury spending. They do not realize that they need to use their credit card responsibly so that their credit score remains in check enabling them to easily get a loan for a home or a car in the future. If you have just passed out of university, use the first 6 months of your wages for necessities, and build your savings.
❌ No Emergency Fund
Every time that I have spoken to students at various schools and universities, their only goal in life is to save for a home or a car they dream of. Building up for a rainy day has never been on their agenda.
This is one of the biggest mistakes people make. An accident, health issue, or losing a job are major causes of cracks in savings. An emergency fund should be built to provide a minimum of 6 months of living expenses to the family in case of a mishap.
❌ Spending At The Rate Of Their Earnings
We all love getting a raise or a promotion. This means we have extra disposable income, higher purchasing power. Wouldn’t you love splurging on a holiday or buying a bigger property? But with this mindset, you will never be able to reach “financial freedom”. Use the extra raise in income to pay off previous loans, or buy an annuity. That way you will have extra income in the future for early retirement, holiday home, or a luxury car!
❌ Not Being Proactive About Their Health
In today’s time and day, nothing is more important than your health. Age has nothing to do with health and immunity. Millennials tend to take their health for granted thinking that they are immortal. Being sensible about your health from the beginning will increase your longevity preventing overheads for health care in the future. Maintain a healthy diet, exercise often, and go for routine checkups to identify probable issues before they turn out to be critical.
❌ Not Investing In Whole Life Insurance
Surely you cannot influence the ups and downs of your life, but as they say, spread your eggs in different baskets. You can control the rate of saving and the percentage of income you put into long-term investments. Having adequate insurance cover can help you sleep peacefully every night. It is one of the fastest ways to grow your wealth. Speak to your financial advisor today.
❌ No Retirement Fund
Every penny counts! A common excuse most millennials say is that they don’t earn enough to set aside 15-20% of their income. If that’s the case, reduce your everyday expenditure to a minimal, but set aside as little as you can while you are young and healthy for a time when you are old and frail. Your retirement fund is not for you to indulge in an adventure in your 30s. It is for you to lead a comfortable, independent life even in your 60s.
Speak to a financial advisor today so you know how to manage your potential unexpected risks in the future!
