Is updating your will, getting life insurance, making a budget, or enrolling in your company’s 401k plan something you’ve been meaning to do, but keep putting off? When I meet with people for the first time, many tell me they have been putting off important financial tasks for years. Here are the most common reasons why:
1. Too busy
Unfortunately, many of us treat our finances like we do our health. When something goes wrong, we rush to the urgent care. Otherwise, we coast along hoping for the best. Between careers, raising kids, volunteering, vacations, etc. who really has the time to sit down each month and make sure our financial affairs are in order?
Do you know how to fix your own car, do your own taxes, or perform your own surgery? Probably not. In many areas of our life that are highly complex, we hire professionals to do the heavy lifting. However, many of us believe we have to tackle our personal finances on our own. Why? Maybe it’s because that’s how our parents or grandparents did it (though most of them had far simpler finances, often working for the same company their whole lives with good benefits and a pension). Whatever the reason, the reality is that trying to understand all your options and make good financial decisions is not easy. Unfortunately, a common response to being unsure what to do is to do nothing at all.
3. Not sure who to trust
So you recognize you are too busy or you’re feeling overwhelmed with your finances, but you still haven’t done anything. Most people in this situation just aren’t sure who to turn to. There are two common beliefs that keep people from seeking help:
- “I’m going to get ripped off” – Maybe you know someone who lost everything in a bad investment or who wasted $1,000s of dollars in a life insurance policy.
- “Financial advisors only work with rich old people” – The reality is, many financial advisors do only work with wealthy retirees. That’s primarily because they get paid based on the amount of money they manage for people. However, there is a growing number of fee-only financial advisors, including myself, who have built businesses to help those who are still working to reach financial independence.
This probably sounds all too familiar to most of us. Unfortunately, the results of our procrastination could be enormous. In my planning practice, I talk to people about “switchpoints” in their financial lives – things that with just a little effort today, could drastically change their futures. For example:
- Adequate Life Insurance – No one likes to talk about death, but term life insurance is very affordable and easy to set up. And the reality is, if you have people who depend on you for support, not having adequate life insurance could create an unnecessary burden if something should happen to you.
- Current Wills – If you have children and you don’t have a will, it should be the next thing you do after reading this article. Deciding who will take care of your children if you and your spouse pass away is a difficult decision, but it’s one that you don’t want to leave up to a judge.
- Consistent Saving – Saving is the foundation of financial success. Though many of us have 401k’s and other vehicles that “force” us to save, most of us are leaving money on the table somewhere. Did you know that saving just a couple hundred dollars more each month could grow to several hundred thousand over 30 years?
- Prudent Investing – No, investing is not the same thing as saving. Saving involves spending less than you earn. Investing means taking that difference and putting it to work. Done right, investing can lead to financial freedom and a comfortable retirement. Even small differences in returns over long periods of time can make hundreds of thousands or even millions of dollars’ difference in your wealth.
These are just a few examples of financial switchpoints. In future articles, I will go into more depth on these and other important financial decisions. The bottom line is, getting your financial house in order is not something you can afford to put on the back-burner. The stakes are too high.
If you are ready to act on your financial goals, I can help you create and implement a plan that works for you, freeing you up to focus on what is most important in your life and giving you confidence in your future.
As a fee-only advisor, I don’t receive any commissions for products I recommend. Instead, I focus on understanding your needs and helping you accomplish your goals.
To schedule a complimentary, no-obligation introduction click here.