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ONLINE BUSINESS HELP

10 of the Worst Financial Mistakes and How to Avoid Making Them!
By: Developer Shed
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    2004-04-29

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    10 of the Worst Financial Mistakes and How to Avoid Making Them!
    by Rhiannon Williamson


    1. Not having financial objectives & goals



    Your money, your finances and your future do NOT take care of
    themselves! If you put off until tomorrow the planning you should be
    doing today and just spend as you go, chances are tomorrow will be too
    late! Protect yourself and your family; plan so that you can provide
    adequately and your money can work harder for you. If you don't know
    where you're going, you can never get there and if you don't know what
    your goals are, you can never attain them.



    2. Having too much of the 'wrong type' of debt



    Debt is pretty inevitable nowadays right? - From mortgages, car finance,
    credit and store cards! But having the wrong sort of debt, debt that
    costs you massively in interest payments and brings you nothing in
    return can stop you from making any financial progress. For example,
    what's the point in spending a large percentage of your monthly income
    on a car, an item that depreciates in value the second you drive it off
    the forecourt? We all want nice things in life, but at what cost? Are
    you guilty of living for today and not planning for tomorrow? Spend in
    relation to what you have earned and not in anticipation of what you
    will earn.



    3. Not having an emergency fund



    Don't leave yourself wide open to fate. Cover yourself with a cash
    portion of your investment portfolio sufficient enough to take the
    pressure should you run into short term financial difficulties. This
    part of your portfolio is the most important part to cultivate first,
    and will provide you with easy access to funds in the short term. Your
    emergency fund should form your lowest risk safety net.



    4. Failing to plan for retirement



    Who is going to look after your interests when you retire? You can't
    rely on the state; it's unfair to rely on your children, you can't
    finance your retirement with a loan so what are you going to do? Do you
    enjoy a comfortable lifestyle now? Do you expect to improve your
    personal circumstances as you go through life? Surely you want to
    retain your current standard of living at the very least when you
    retire. Then you need to start planning today - YOU are the one who
    will have to keep you in your old age! It is NEVER too soon to begin
    your pension planning.



    5. Not having life insurance



    If, God forbid, something were to happen to you or your spouse, how
    would the surviving partner cope? Double the responsibility, no
    personal and emotional support and one main income lost - it doesn't
    bear thinking about. Take that consideration out of the picture; get
    sufficient life insurance to protect the future security of the ones you
    love.



    6. Taking advice from friends & family



    Without wishing to insult your family and friends! What is right for
    one person may not be right for another when it comes to financial
    decisions and investment planning. What was right for one person last
    year may most certainly not be right for anyone this year! Think about
    it, does your own personal circumstance reflect to the letter that of
    the advice giver? Understanding your personal and financial position,
    together with understanding and timing the market into which you are
    considering investing takes an awful lot of skill and professional
    judgement.



    7. Not teaching children about money



    Monetary bad habits can be learned and inherited; do your child the
    favour of educating them and setting a good example for them to follow.
    Don't let them get into the habit of believing that money grows on trees
    or is in endless supply. Explain the work ethic and that with effort
    comes reward. Introduce them to good financial management in the form
    of regular saving. Lead and they will follow.



    8. Misjudging risk



    Do you know what your risk profile is? Do you fully understand your
    attitude to risk? Are you cautious and not interested in unnecessary
    risk, are you fairly conservative but accepting of a reasonable level of
    risk? Or would you say you are adventurous and speculative when it
    comes to money? Knowing yourself is only one part of the risk issue.
    Do you really understand the element and nature of risk involved in any
    investment you have or are about to take out? Know your own mind and be
    clear about what is acceptable to you, then be sure that what you decide
    upon in terms of financial commitment truly meets your requirements.



    9. Doing nothing when in doubt



    If you don't know the answer to something, ask someone who does. If you
    don't understand the answers, ask again. There is no such thing as a
    stupid question, there is however a great deal of stupidity in burying
    your head in the proverbial sand when you are unsure of what to do,
    where to go and whom to ask about your financial situation. If you
    ignore a problem in life it rarely goes away - in fact, quite often the
    opposite happens and the small issue becomes a great problem. The same
    is SO true when it comes to your own personal financial situation. Get
    informed, get in control and take appropriate action at every step of
    the way. Do not remain passive! This is your money and your future
    we're talking about.



    10. Buying into unsuitable investments



    Knowing what's right for you and when it's right for you are two key
    points to get to grips with. Your financial goals will develop and
    change as you go through life. What would have been a sound financial
    investment with a fair degree of risk for you at age 25 could spell
    disaster for you as you approach retirement at age 65! Sounds obvious
    right? But too often in life people fail to consider timing when it
    comes to investing. Whether that is failing to understand the timing of
    the market into which they wish to enter and buying high, selling low -
    or failing to understand the timing and stage they are at in their
    financial life. Understand your risk areas and get them covered and get
    sound financial planning advice from a professional at every stage in
    your life.



    Get your financial affairs in order today!
    DISCLAIMER: The content provided in this article is not warranted or guaranteed by Developer Shed, Inc. The content provided is intended for entertainment and/or educational purposes in order to introduce to the reader key ideas, concepts, and/or product reviews. As such it is incumbent upon the reader to employ real-world tactics for security and implementation of best practices. We are not liable for any negative consequences that may result from implementing any information covered in our articles or tutorials. If this is a hardware review, it is not recommended to open and/or modify your hardware.

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