Financial Planning Mistakes Everyone Should Avoid

By: Ben Campbell | Published: Feb 22, 2024

People throughout the U.S. have felt the sting of a tougher economy in recent years, and it’s been difficult for many to save.

However, just because the economy is fluctuating doesn’t mean it’s impossible to acquire savings. In fact, there’s always an opportunity to set money aside so long as you receive the proper guidance.

Savings Experts Share Their Best Tips

Luckily, the internet is filled with the advice of financial experts who are out to ensure everyone can save some money.

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But in order to begin stacking cash in the bank, we must first listen to the financial experts and avoid these five mistakes.

Lack of a Financial Plan

The number one mistake people make when it comes to saving is they don’t plan ahead.

A woman pictured as she uses a large wall to map out a plan

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According to Fool, the average American spends less than two minutes daily each year planning out their financial goals and targets.

Setting Up a Plan

So, before any serious savings can take place, think about your financial goals and make a plan to help you achieve them.

Couple pictured as they budget their finances at a wooden desk in their home

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How much to save, when to save, and a monthly budget are all great places to start. For those who don’t believe in their capabilities to plan, try using a budgeting app to help with the process.

Not Making Your Saving Contributions Automatic

One of the easiest mistakes to make when it comes to saving money stems from not automating your contributions.

A man is pictured handing over a cheque to a teller at his local bank

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For example, if you plan to deposit $20 weekly into a savings account, make this payment automatic.

Automatic Payment to Savings Account

Automatic deposits come with a plethora of benefits. The most prevalent is that it stops us from spending the money we should be saving on something we don’t really need.

A man dressed in a dark suit is pictured using his laptop to make a payment

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Setting up an automatic payment is a relatively easy task. Simply log into your online banking and from there, you can set up a recurring payment into a savings pot of your choice.

Lack of An Emergency Fund

Lack of an emergency fund is another common mistake made by many people.

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Life can be unpredictable, and it’s difficult to know exactly when your car may break down or to predict when a boiler decides to stop working. Without an emergency fund, we are left helpless when life hits the hardest.

Slowly Build Up the Emergency Fund

While most experts generally agree that four to six months’ worth of expenses is ideal when it comes to an emergency fund, this shouldn’t stop anyone from starting small.

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Building up to that ideal number, whatever it may be, is a process that can take several months or even years. Something is always better than nothing when it comes to an emergency fund.

Review Your Financial Goals Each Year

When it comes to financial goals, remember that things change, and it’s best to review the plan each year to ensure it still meets the expected goals.

A couple sit down on their couch and review their financial goals for the year

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Set a date in the year to review the savings plan and tweak anything that could help take your savings to the next level.

Ensure Plans Align to Long-Term Goals

Paul Clifton, Director of Wealth Planning at Arbuthnot Latham, spoke on the importance of ensuring that financial plans are reviewed each year.

A man and woman compare notes as they seek to plan out their financial goals

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“That is not to say that things do not change. In fact, you should review your financial plans on a yearly basis to ensure that they still align with your long-term financial goals,” he said.

Savings Account Used Like a Checking Account

A problem that arises with those who finally begin to see the numbers climbing in their savings account is they start using it like a checking account.

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It can be just as challenging not to spend the savings as it was to build them up in the first place. Remember, the savings have a purpose in the long run.

Power to Make Savings a Reality

While the experts’ savings tips can help kickstart an individual’s journey, it always comes to mind over matter.

A couple smile as they reflect on the goals they have achieved while they sit in their kitchen

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We all have the potential to make savings a reality. Whether it’s for a dream holiday, a new car, or even a safety net, it all begins with a few small steps.