With the turning of a new decade comes the review of what happened in the last 10 years and the hope of what the next 10 years might bring us.
Because of my philosophy of investing in your greatest asset (which is YOU) at all times, I’m going to give you my top 7 mistakes to avoid in the next decade:
Mistake 1: Avoid Ignorance
Ask yourself, how can you get what you want if you don’t know what it is that you are seeking?
I most commonly see this mistake taking place in the current marketplace when I witness people chasing a particular product or rate of return. They usually do this before having sort of clarity of what they want or having any sort of concrete plan developed.
Once a plan has been developed, only then can you clearly see what “success” truly means to you. Then once you’ve established what kind of “success” you desire, you can begin to understand why you are undertaking any financial strategy by seeing how it fits into your overall financial blueprint.
If you fail to plan and allow ignorance to be your guide, you will likely find that you’re spinning your wheels and wasting resources chasing financial returns that are full of false promises.
Mistake 2: Stop Being Inefficient
Sure you can add fuel to your pipeline, but why not fix the leaks first?
Many people believe that “more money” is the solution to all of their financial woes. However if your current plan isn’t efficient, then trying to save more money for investments is like trying to add more gas to a leaky pipeline.
The faster you put the money in, the faster it leaks out.
Start by plugging the leaks in your financial pipeline first by doing things such as improving your credit score, looking to refinance higher interest rates into lower ones and evaluating the costs of your current investments.
Or consider paying off higher interest debts before investing your dollars into something with lower interest rates than you are paying out.
Mistake 3: Not knowing how to benefit from your investments.
Do you have a solid exit strategy for your investments?
It is risky and unwise to invest money into something where you don’t have a clear and executable exit strategy. Even worse is lacking the knowledge of how your investment will benefit you both today AND in the future.
For example, real estate can be much easier to buy than to sell and get your cash back out. Or in the case of many company sponsored plans, it is easy to put money in a 401k, but not always easy to access it if you needed the money at a later time.
Mistake 4: Don’t pay unnecessary taxes.
Are death and taxes the only things we can count on?
If you are running a business without a corporation or a tax strategy, it is inevitable you are paying too much in taxes. If you don’t have a business in the first place, do you at least have a passion project or interest which would allow you to start a business?
If so, taking that step could open up numerous tax benefits as well.
Another major mistake people make with taxes is to merely delay them under the false belief that this delay is somehow saving them on taxes. It is merely putting off the inevitable, and you may even find yourself in a higher tax bracket when it comes time to pay!
Mistake 5: Don’t overpay on insurance due to improper structure and coverage.
Are you insurance poor without even realizing it?
The greatest error I see is people over insuring unnecessary things while under-insuring the most important asset: you. Overpaying for unnecessary insurance and being overexposed when it comes to the catastrophic risks is a common and dangerous mistake.
For example, choosing a very low deductible on your car insurance (which raises your payment) and then carrying the minimum coverages possible (to save money) makes no sense at all.
This type of strategy protects you from spending “pennies” on the deductible and leaves you exposed to potentially losing your entire life savings if something catastrophic happens. Does that trade-off make sense to you?
Mistake 6: Investing in the wrong places.
If you don’t know where to invest…. Then don’t!
If you don’t know where to invest your resources, then start by investing in yourself in the form of education and personal development. Investing without an understanding of what is happening with your money is just high stakes gambling.
Instead, build your financial knowledge, grow your confidence, and look for ways that you can be more productive. Most importantly, invest in and learn about areas where you have enough motivation or interest that you will study, or where you already have strong passion or knowledge.
Mistake 7: Don’t ignore your responsibility – do something!
Burying your head in the sand is NOT the answer.
Living a life of prosperity requires both responsibility and action. Without action your situation cannot improve, so get started today.
Even if you’ve never invested before, realize that you are not alone. Everyone starts at the beginning, so take the first step and begin your education right away.
You’ll soon realize that you don’t have to be a financial genius to learn how and where to put your resources to work safely and profitably.
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Garrett Gunderson is an entrepreneur, financial coach, the founder of Freedom FastTrack, and the primary author of the New York Times bestseller Killing Sacred Cows: Overcoming the Financial Myths that are Destroying Your Prosperity.
Garrett loves inspiring others to turn their potential into production. He has dedicated his life to living and teaching a unique concept known as Soul Purpose that reveals how anyone can live a more prosperous and rewarding life.
As a finance and business productivity coach, Garrett instructs both large and small groups of business owners and financial service professionals nationwide.
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