Financial advisors have seen it all. From people who are burdened by six figures of credit card debt to millionaires, their clients span a range of backgrounds, income, stages in life, and relationships to money. That’s what makes their jobs equal parts challenging and rewarding.
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However, as financial advisors gain experience, they come to observe a few general patterns in their clients’ banking and how they manage their finances. And in those patterns, there are some common mistakes. Fortunately, almost every mistake provides an opportunity for people to learn more and do better — if they know where to start.
GOBankingRates connected with a few financial advisors to learn more about the common money mistakes they’ve seen and to share their advice for avoiding them.
As the Founder and CEO of 11 Financial, Taylor Kovar has helped a lot of business owners achieve their financial goals over the years. However, he’s also seen that many of his clients, particularly business owners, are reluctant to retire completely, even as they reach the age where a lot of people are ready to sail off into the sunset professionally.
Though society often portrays retirement as carefree, there are also many individuals who want to stay involved in the businesses they’ve built, even part-time. Those people sometimes don’t realize they can factor continued income from their businesses into their retirement budgets. Worse, they may avoid budgeting for retirement altogether because they think it would mean giving up their passions. And if they choose to stay working, even at reduced hours, failing to account for taxes can become a costly mistake.
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“It’s important to remind clients that retirement doesn’t have to look like the traditional model,” said Kovar. “They can create their own version that allows them to continue doing what they love, just at a different pace.”
For Andrea Woroch, a nationally recognized consumer finance and budgeting expert, one of the biggest, most frustrating errors people make is leaving money on the table by keeping it in a traditional savings account. Instead, she recommends people move their savings to a high-yield online savings account that pays higher interest — essentially allowing your money to make money for you. Best of all, you don’t have to do anything other than make the initial transfer.
