Plan for Financial Success: Avoid These Common Blind Spots
When it comes to managing personal finances, it can feel like there are endless checklists and rules to follow. From budgeting to saving to paying off debt, the list goes on. However, in the midst of all these financial considerations, it’s easy to overlook some important key points. That’s why our team of certified financial planners at Extreme Investor Network has identified the biggest financial blind spots that consumers often miss.
1. Credit Scores:
Understanding the importance of your credit score is crucial. Your credit score determines how easily you can get a loan and the interest rate you’ll pay. The higher your credit score, the more favorable loan terms you’ll receive. For example, someone with a score of 760-850 may get a 6.5% interest rate on a mortgage, while someone with a score of 620-639 could face an 8.1% rate. That seemingly small difference can add up to significant savings over the life of a loan.
2. Wills:
Creating a will is essential for estate planning. It outlines who will receive your assets after you pass away and can also designate guardians for your children. Without a will, the state courts will make these decisions for you. Don’t leave your family’s future to chance—take the time to create a will and possibly set up trusts for more detailed asset distribution.
3. Emergency Savings:
Having an emergency fund is vital for weathering unexpected financial storms. The amount you need to save will vary based on your circumstances, but it’s generally recommended to have at least three to six months’ worth of expenses saved. Business owners should aim for even more, as the recent pandemic demonstrated the importance of financial reserves during uncertain times.
4. Tax Withholding:
Understanding how tax withholding works can prevent surprises come tax season. Adjust your withholding as needed to avoid owing a large sum or receiving a big refund. Major life events like marriage, divorce, or changes in income are good times to reassess your tax withholding.
5. Retirement Savings:
Many people underestimate how much they will need in retirement. Consider not only your basic living expenses but also any additional activities or long-term care that may be necessary. Working with a financial advisor can help you create a retirement savings plan that aligns with your goals and lifestyle.
By addressing these common blind spots, you can set yourself up for financial success and achieve your long-term financial goals. Visit Extreme Investor Network for more personalized financial advice and strategies to maximize your wealth-building potential.
