Life is full of financial decisions.
Some of these decisions are simple. Some of them, complex. One thing is certain: They all have the potential to make a real impact on your life. In a decade, your world can look quite a bit different than it is today - all because of these decisions.
Today I'd like to focus on some financial choices you're sure to regret in 10 years. I'd like to save you from the pain, the chaos, and the heartache that occurs when people make these decisions.
Put these on your not-to-do list. You'll be glad you did.
1. Waiting to start a budget.
Have you procrastinated on starting a budget? It's time to sit down and get your spending under control.
The beautiful thing about a budget is that it not only keeps you on track with your spending, but it tells you what you should feel free to spend. Have you ever eyed a triple scoop ice cream cone and thought to yourself, "You know what, I'm not sure I should buy this - perhaps I'm spending too much money on little things."
No more, my friend. No more. When you have a budget, you know how much you can spend and still be okay.
The long-term benefits of having a budget are incredible. Think of all the money you'll save, the financial goals you'll fund, and the peace you'll have with your spouse when making financial decisions together. That's worth it!
2. Using credit cards without paying them off every month.
Credit card debt can pile up fast. If you're not paying off your credit cards every month, you should start. The interest on credit cards can be absolutely ridiculous.
If you can't handle having credit cards and paying them off every month, you shouldn't have a credit card. Budgeting can help you ensure you're spending using your credit cards appropriately.
3. Buying a financial product without doing your homework first.
I know a woman who paid over $3,500 in variable annuity fees and didn't even know it. Don't think it can't happen to you.
If a financial advisor or insurance agent is selling you a financial product, make sure you educate yourself on the product before you sign on the dotted line.
4. Neglecting your emergency fund.
Emergency funds help protect you from the inevitable. You're going to have a financial setback at some point. It could be a few hundred dollars, or a few thousand.
I recommend you have eight months worth of expenses in an emergency fund. After you use the fund for emergencies, make it your top financial priority to replenish your emergency fund.
If you let your emergency fund slip into the abyss, you might find yourself down the road with more debt than you can handle.
5. Buying a new vehicle when you can't afford it.
Vehicles are important for many people, but they can also become a discretionary black hole. If you are planning on buying or leasing a vehicle when you know you don't have the money, please don't.
The ramifications of a car payment well exceed the financial hit of the price of the car, and you can end up spending your retirement away without realizing it.
6. Not working with a financial advisor when you know little about investing.
If you're not a financial professional or haven't been exposed to financial education, you really shouldn't be investing unless you're doing so with the help of a financial advisor.
Financial advisors can save you a great deal of time and money ensuring your investing strategy is relevant for your situation. Don't go without this valuable service.
7. Delaying the purchase of important insurance policies.
If you were to die right now, would your family be financially okay? If not, you need life insurance.
And, that's just one example. There are a number of important insurance policies you shouldn't delay in putting in place: disability insurance, perhaps long-term care insurance if you're over 60 years old, and perhaps umbrella insurance.
Insurance protects you from financial liability you wouldn't be able to cover with your emergency fund alone. Don't neglect it.
8. Putting your retirement on the back burner.
Saving for retirement is critical. If you're trusting Social Security to be your sole source of income, think again. It's not likely that you'll be able to maintain your lifestyle with Social Security benefits alone. If you would be able to, congratulations, you're living pretty frugally!
Invest today with a financial professional you trust.
9. Not getting on the same page with your spouse about money.
If you want to crash and burn financially, not getting on the same page with your spouse about money is a surefire way to do it.
When you married, you became one - one in purpose.
Why not align your financial goals? Talk through your differences, learn to compromise, sail in the same direction. It will be worth it - especially down the road.
10. Not cutting back on your recurring expenses.
Have a high smartphone bill? Paying too much for garbage service each month? How about that cable TV bill - how many channels do you have that you don't really watch?
Ask these types of questions. They're good ones, because they focus on recurring expenses. While certain recurring expenses may not cost much each month, they can certainly add up over time. Look for ways you can cut these expenses and just imagine how much money you can earn by investing what you save over the next 10 years - it's probably more than you think.
Make smarter financial choices that lead to a brighter future. Even taking on just a few of these tips will make a significant difference in your life. Which ones do you need to work on next?