5 Financial Roadblocks to Avoid
What’s keeping you from reaching your financial goals? If you feel like there are too many hurdles in the way, you may be running into what we often call “financial roadblocks.” Financial roadblocks are anything that can keep you from reaching your goals either on time or at all.
The first step to overcoming these roadblocks is identifying which ones impact you the most. Here are five common financial roadblocks and how to avoid them.
Roadblock #1: Setting the Wrong Goals
The problem may not lie in your saving and investing strategy but in the goals and benchmarks you’ve set for yourself. Do your goals align with your desires AND your resources?
If you set your sights too low, you’ll be reaching goals quickly but potentially wasting the opportunity for something greater.
If you set your sights too high, it’s easy to get discouraged when you aren’t where you hoped you’d be.
If you’d like some guidance in defining your financial goals, our advisors would love to help!
Roadblock #2: Thinking too Much in the Short Term (or Long Term)
Most people can be categorized as a spender or a saver. Spenders are more likely to focus on impulse purchases or short-term goals, such as buying a new car. Savers tend to be much more conservative with their money and may concentrate their entire strategy around savings.
Neither of these is wrong. But it’s important to consider both in your financial planning.
You may need a new car because your family is growing. You may also need to strengthen your emergency fund. Both ways of thinking are essential to a strong financial strategy.
Roadblock #3: Not Sticking to Your Budget
If you don’t have a budget, that should be your first step. Creating a budget helps you identify how much you are spending each month compared to how much you’re making. It’s also a great tool to determine where you may be unnecessarily spending money.
After you create a budget, it’s just as crucial to stick to it. Maybe you plan to set aside $300 at the beginning of each month to go into your emergency fund. But, a vacation is coming up, and wouldn’t that be nice as extra spending money?
Your budget can change when your situation and needs change, but the only way to use your budget as a tool to help you reach your financial goals is to follow its direction!
Roadblock #4: Carrying Too Much Debt
As we’ve said before, we don’t believe debt is condemned, but it does have consequences. Unresolved debt prevents you from building equity, contributing to an emergency fund, or focusing on investing wisely.
See if you can refinance a loan for a lower interest rate! We often recommend focusing on the debt with the highest interest rate first to minimize the amount you will have to pay back in the long run. If you feel you’d be more motivated by knocking some of your smaller debts out first, you can take what you were paying on these smaller loans to help pay off the larger ones faster.
Roadblock #5: Not Aligning Your Goals With Your Values
Do your financial goals align with what matters most to you? If all your money is going towards a retirement plan, but you’d rather spend more time with your kids, what if you readjust your plan to allow one parent to work part-time?
Or maybe you’re investing a lot into a portfolio with companies that do good and bless humanity, but there is a local organization you’re passionate about and want to become one of their monthly donors.
We believe that your financial and investment strategy should reflect what matters most to you. When you meet with one of our advisors, they take the time to get to know your values, desires, and situation so they can build a plan to help you live well and finish well.
Contact us here to get more information or schedule a no-obligation consultation.
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