Financial freedom is a luxury that many work their lifetime to achieve. Having a high net worth means that you’re defined as having investable finance in excess of $1 million. This is a reality to a few, and a dream to many. The shocking truth is that more and more individuals are entering into deeper financial burdens on a daily basis.
If you have hopes of a financially stable future then be wary of these 5 financial burdens that can cripple your net worth.
Credit Card Debt
Society needs to break the mindset of “Oh I’ll pay for it later.” If you don’t have the cash, don’t buy it! Using credit cards to establish and maintain a positive credit rating is a good strategy but the most important thing you need to do in that case is……pay it off in full each month.
Living Beyond Your Means
Print off your last two month’s bank and credit card statements. Highlight all items that were extra spending and not necessary. Now add them all up. Are you shocked? Do you even remember enjoying all of those expenses? Save 10% of your income. When you do this, you are automatically living below your means.
Paying for Your Children’s College
As a loving parent it’s only natural to want to give your child the best and that includes paying for their education. However, as it’s been said many times, you can borrow money for college but you can’t borrow money for your retirement. Talk to your fee-only financial planner to develop a good balanced strategy of funding their education while not sacrificing your future. This is great opportunity to teach your children about financial responsibility by allowing them to pay a portion of their college tuition and expenses..
Not Taking Advantage of your Employer Match
Many people do not realize that they are throwing away FREE money by not contributing up to the amount of the employer match within their 401k. For example, if your annual income is $50,000 and your contribution rate is 4% with a 6% company match, then you are throwing away $1,000 in free money each year! Be sure to check your level of contributions to ensure that you are receiving the full match.
Not Saving for Retirement Until Your Pre-Retirement Age
Most people start to think about hiring an advisor when they are nearing retirement and realize “I should’ve been saving long ago.” You should start saving for your retirement when you first start working. I know that retirement is an event that is too far in your future to think about when you’re young, but it is necessary. Plus, how can you regret saving money for your future?
So how do you know when and how much to start saving for retirement? How do you enroll in your 401k, change the contribution rate and pick the investments? What options are available for paying for your child’s education? How do you get rid of credit card debt? These are some of the many questions that can be answered with the help of a fee-only financial planner. When you start working with one, you’ll be asking yourself “why didn’t I do this years ago?”