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Financial Planning Mistakes
Manage your finances more effectively.
At ScotiaMcLeod, we provide trusted advice and personalized solutions to help you achieve your financial goals and peace of mind. We've created an extensive list of top-level steps can help you ensure that you don't overlook any of the key areas of your business that could be associated with your succession planning. We want to do more than just help you get there.
Mistake #1 - No Plan
A staggering number of people have no real plan in place to help them achieve their goals and objectives.
- Individuals who are most successful with managing their finances have developed short- and long-term plans
Mistake #2 - No Goals
The reason many people don't have a plan in the first place is that they haven't determined their goals and objectives.
- There are the obvious goals such as retirement date and estate goals
- Most people have other goals over the course of their lifetime, both financial and non-financial
- Many individuals haven't taken the time to articulate their objectives and then develop a plan to achieve them
Mistake #3 - Time As a Friend
Time is probably your best friend when it comes to financial planning
- It's very difficult to replace time without increasing your risk
- The earlier you get started towards achieving your plan, the sooner you'll achieve it
Mistake #4 - Time As an Enemy
While you may have a good idea of what your business is worth, you should still consult with a professional business valuator to confirm or determine this crucial figure.
Time is also an enemy for many people. Not only from the perspective that they delay executing their plan, but also in terms of how much or how little time they spend managing their finances or their plan.
- If you spend more time looking for a new stereo, refrigerator or car than you do managing your finances in a particular year, then time is probably an enemy
Mistake #5 - "Chasing" Mentality
Financing the change of ownership should be a key part of your succession plan.
Too many people have a "chasing" mentality - that is, chasing the latest, greatest and best idea or investment.
- The key to determining whether an idea or product is appropriate for you is to consider whether or not it contributes to the achievement of your financial plan (which means, of course, that you need to have a plan in first place)
Mistake #6 - I Can Do It Myself
Most people need some kind of professional advice to manage their finances. Whether it is tax, investment, legal or other advice, most people cannot do everything themselves.
- Too many people try and do everything because they think they should be able to or they don't want to pay the fees that professionals may charge
- Don't be foolish - know your limitations and get help
Mistake #7 - It's My Money
This is a mistake that some couples make. For reasons that are usually non-financial in nature, many couples manage their money separately.
- There are a number of reasons for looking at the total resources of a family, not the least of which is tax-related
- The best reason to manage your money together is to make sure you achieve your shared goals and objectives
Mistake #8 - "Lock In"
It's essential to remain flexible in your planning. Many people make decisions that they can't get out of or, if they can, it becomes very expensive.
- Setting up your plan to achieve your goals while maintaining flexibility is very important
- Both your plan and your goals and objectives will change over time