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5 Common Financial Missteps That Slows Wealth-Building

5 Common Financial Missteps That Slows Wealth-Building Posted on June 15, 2018Leave a comment

Creating wealth is a life long journey for most people. Building it up takes hard work and dedication to the process. Sadly, however, losing our wealth is more than easy to do with a few financial missteps. Sometimes our financial decisions are wrapped in the best of intentions, but end up doing more harm than good.

But causes this kind of mindset? Lack of knowledge can be an issue since basic finances are hardly taught in schools. This lack of education can lead to inexperience with money and how to plan for your future or gives birth to misconceptions on how building wealth works.

Life is hard enough, there is no need to hamstring ourselves with mistakes that were made with the best intentions in mind. This article will help you navigate the minefield of financial decision-making to ensure you set yourself up for a more stable financial future. Here are some honest mistakes that can have dramatic effects on wealth building.



Not Investing Your Money


            Not investing can happen for a numerous of reason. From not trusting a stranger with your money to feeling like investing is too complicated or feeling like markets and investing is too uncertain to venture into.

All of these concerns are certainly reasonable and understandable. However, failing to invest your money during your prime working years will handcuff you in retirement, maybe even be the cause not to retire.

Most employers have a sponsored plan or a 401K, which should fully be taken advantage of. These types of investments will grow over time with monthly contributions and can make retirement an easy transition.


Not Formulating a Budget


            A big misconception is that creating a budget is boring or time consuming. An argument that is harder to use where more and more apps can basically create a budget for you. But having a budget has tremendous benefits allowing you to see where your money is going.

Having an idea of where your resources are going opens the door to reallocate funds into more wealth-generating practices. It doesn’t take much time at all to do make a budget and the benefits are great.


Foregoing Emergency Reserves


Having money set aside for whenever life throws you a curveball makes a ton of sense and is the most common advice someone receives. But it is much easier said than done where many Americans live paycheck-to-paycheck. There’s also a mindset that people have that emergencies won’t happen to you, but anyone can lose their job, have something on their car give out or a medical expense come out of the blue. Most financial planners say it’s best to have three-month’s worth of expenses set aside.

It’s much harder to put this into practice, but if you have extra income at the end of the month, putting those aside for a rainy day can save you later down the road.


Saving Money While Having Debt


            It’s easy to think that making monthly contributions to a savings account or some other investment is a good practice even when you have debt on your shoulders. By not devoting your disposable income towards paying off your debt, you are only prolonging the life of the debt by letting interest drag on.

Paying off your debts as fast as possible is the best course of action before having more funds going towards investments.


Not Using Insurance


            Similar to the mindset with not having an emergency fund, saving money by not having insurance is a gamble that can have disastrous endings. Medical conditions, or even automotive expenses, are never expected or planned. The hope of never having to use it is the idea, but it’s nice to have that safety net in place, especially If you are the breadwinner of your family.

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