Cutting corners – we all occasionally do it in life. Whether we do this with our finances, exercising, etc., we’re all guilty of this sometimes. When you do this financially, it can really hurt you in the long term.
Subscribe With Your Favorite App
Cutting corners is never a good idea in life, especially when it comes to your finances. Here are some ways that can hurt you.
It can be tough to stay on top of everything and know where all of your financial accounts are, what your passwords are, etc. But if you don’t, that can get you in trouble
You need to ask yourself – are your finances really aligning with what you’re trying to achieve?
Just like with building a house, you need a plan and a blueprint and then you get organized around that plan. For some reason, finances are that thing that people keep wanting to put to the side and not necessarily get organized.
When it comes to your financial future, do you have a plan, and are you organized? List out what your targets are – When do you want to retire? Do you want to buy a second home? Do you want to pay for your children’s college education?
That organization helps you determine your path and get organized to achieve that path. Some people are afraid to write it down and worry about disappointment. But if you never try to achieve it, you’ll never know.
Put your goals on paper.
Legal documents are not exciting, can take a lot of time to work on and can force you to think about things you don’t want to think about, like death.
Cutting corners here could mean trouble and stress for your family. If something happened to you, your beneficiaries could have to sit in probate, a costly and timely process.
Some key documents you need to have in place:
- Medical power of attorney
- Financial power of attorney
- HIPAA documents
Risk in Investing
When people take too much risk it’s usually because of emotions. Maybe they feel they haven’t saved enough and need to make up those earnings. Another emotion that drives high risk-taking in investments is greed.
It’s important to take some time and sit back and see if your portfolio aligns with your future income needs. Taking on too much risk without funds for safety can be dangerous if there is a downturn in the market. People cut corners, they think a market downturn won’t hurt them. It’s taking the easy way out.
Details of Investments
It’s easy to take the advice of friends when they say they know of a good product. Or maybe you don’t understand 401(k) and their fees. Unfortunately, this is often the industry cutting corners and not completely explaining the details of an investment. Make sure to ask questions and understand all the important parts of your investments.
Long Term Care
We don’t always want to think about this issue. It’s important to approach this now though. Most of us will need some form of long-term care. A lot of people think they won’t – that’s where cutting corners come in.
This is a huge expense that we should account for or we will be paying a lot of money out of our estate. If you want to protect your assets and estate, have this discussion early on.
Listen to the full podcast or use the timestamps below to jump to a specific section.
[6:50] – Getting organized
[11:06 ]– Legal documents
[15:04 ]– Risk in investing
[17:37] – Details of investments
[20:44 ]– Long-term care
Thanks for checking out this episode. We’ll talk to you again soon.
“When it comes to your financial future, do you have a plan and are you organized?”