A recent article from Business Insider shares some potential money pitfalls that you want to miss, and while the usual suspects are here, there are also a few issues that tend to run a little further under the radar.
For one thing, we’ve often heard about seeking out the return on investments, but this is only one of three parts that affect how much you make, one being how much you invest and the third being how long you are invested. Surprisingly, the length of time you have invested has the biggest effect on overall value. Whether you are investing or simply saving, it pays to start early.
Life decisions can make a difference in your planning. A good example is a marriage. Many will point to expensive divorces as the first example, but marrying a spendthrift or someone whose financial habits are incompatible with yours are every bit as damaging. It’s not very romantic, but it’s the truth. Take advice from The Millionaire Next Door:
“What if your household generates even a moderately high income and both you and your spouse are frugal? You have the foundation for becoming wealthy and maintaining your wealth. On the other hand, it is very difficult for a married couple to accumulate wealth if one is a spendthrift. A household divided in its financial orientation is unlikely to accumulate significant wealth.”
No one can predict with certainty how a relationship will end, but you can be responsible before making the move. Have financial discussions with your partner before getting married to try and determine if you are a good financial match. When you are married, always try to make major financial decisions as a couple.
In addition, part of your financial responsibility doesn’t end with your life, as morbid as it may sound. Money Magazine reports that 57% of Americans don’t have a will, including 69% of parents with kids under 18. This means that the state will ultimately decide what happens to your finances after you die. Look what happened to Prince’s family and estate after his death to see how much of a mess no will can leave for your loved ones. Even if you don’t have a fraction of his assets, the chaos is still there. Don’t only take the time to make your will, but keep it update is your life situation changes.