Avoiding Common Financial Misconceptions for a Secure Future
Financial planners can be a valuable source of financial information and investment opportunities for many people. Yet, too many people remain in the dark when it comes to their finances. They may realize that they need help, but either put it off or do not believe anyone can help them with their financial situation. There are many common excuses when it comes to financial planning and money management. Most of these excuses are due to lack of information or poor understanding of the financial planner process.
I cannot afford to save anything
Many Americans currently live paycheck to paycheck. They may struggle with paying their rent, utility bills, and car payments. These people may also believe that there is no room in their budget for a savings account. However in most cases, a new budget can move around existing funds to better meet current financial needs, while also beginning a savings account. Financial planners can help with budget services and reworking payment plans so that they better suit the individual.
I don?t need an emergency savings, my job is secure
This is often a statement made by those in tenured or unionized positions. However, accidents and problems can occur so that you are no longer receiving income. If you are injured on the job, you may receive compensation, but it may not be similar to what you were making. Your spouse could lose their job, cutting your household income in half. Your emergency situation may not even involve work. Maybe your housing payments increase, making your current income not enough to make the payments. An emergency savings account can give you time until you can improve your situation.
The stock market is too risky
Some stocks in the stock market are risky. However, the majority of them are not. Many stocks remain consistent over the day to day. Yet, if you invest into them early on, and leave your money in them for many months, you will notice an increase that is greater than a high interest savings account. Investment firms are financial planners who are well experienced in the stock industry. They can offer valuable recommendations and risk options for your savings accounts. Your financial investment will likely depend on your time until retirement, your amount of income, and the risk that you want to take.
I am only 20. I don?t need to save for my retirement yet
The difference between saving for retirement in your 20?s versus waiting until your 40?s or 50?s could be hundreds of thousands of dollars. Instead, you cannot afford to wait to save for retirement. You may have to work many additional years after your planned retirement age to make up for the years that you did not save. One in five people who are near retirement age have zero money saved. Your financial planners can help you to avoid this situation.
I don?t plan on staying with my company forever
This excuse is common in why people do not contribute to their work?s 401K plans. Just 53% recent of the civilian workforce participates in or contributes to a retirement plan, according to the U.S. Bureau of Labor Statistics. In a survey, the most common savings vehicle was a defined contribution plan such as a 401K or 403B, used by only 44% of the people surveyed.
How long you plan to stay at your current position should not decide whether or not you contribute to the 401K plan. The money comes directly out of your paycheck and is an easy method for saving for your retirement. When you move positions, you can simply transfer the 401K account to a new one, or to an entirely different kind of a savings account. Financial advisors can help with choosing the new savings account. Your 401K is one of the most important investment management opportunitys you have.
Not enough Americans save for emergencies or their retirement. The lack of appropriate saving is often followed by a few common excuses. Many of these excuses do not actually apply to the financial savings situation. Working with financial planners can help you overcome these excuses, while getting a better start on a secure financial future.