After two years of masking up and shutting down, we stir-crazy Americans are traveling again!
Beaches are packed, Disney is bustling, and national parks and campgrounds are turning away visitors.
Our renewed wanderlust means a reintroduction to a regular feature of road trips: potholes!
We’ve all had the unpleasant experience of driving along and hitting a pothole we didn’t see. Ouch! The vehicle creaks, the driver curses, and everyone in the back seat cries out from the jolt.
“Why doesn’t someone fix that thing?” someone in the car moans—as they see stars and rub their aching head. Good question! It’s possible to fix a pothole before a minor bump becomes a major BAM!
“Why doesn’t someone fix that thing?” is also a smart question to ask yourself about the potholes in your financial life. You probably don’t see them, but they are out there…right in your path. And if you hit one, it could just be a minor irritation. Or it could lead to an expensive or even catastrophic outcome.
Better to be proactive and fix the potholes before you hit them.
What are the common potholes that you may need to fill in your own financial life? Here are a five to consider.
A recent Bloomberg article claimed that half the households in America with a $250,000 income live paycheck to paycheck. If you have that much income and little or no savings, you’re looking at a pothole with the potential to become a Grand Canyon of trouble.
Is this the flip side of #1? Maybe. But you don’t have to be making $250,000 to be able to save money. The way to start is to save first, then spend what’s left over. If you spend first, hoping you’ll have money left to save…you won’t.
- Being mis-insured.
Many have insurance. Others complain of being “insurance poor.” What I often see are people spending money on the wrong kinds of insurance. Better to self-insure for little things and the low-dollar stuff. Buy insurance to protect against big catastrophes, not small inconveniences.
- Not updating one’s investments.
When was the last time you made a change to the investments in your portfolio? You should be regularly updating your investment or retirement account. Your asset allocation needs to align with your current stage in life and reflect the realities of the current economy.
- Not having a retirement income plan.
This last one is the most important one of all. It involves all aspects of your financial life: protection, debt-reduction, savings, growth, and retirement. It isn’t sufficient to simply have savings and investments. A 401(k) is a very useful savings and investment tool; it’s not the same as a plan for generating regular income in retirement.
Hey, road tripper, have fun this summer! But be safe. The potholes are out there. So don’t get careless or think you’re somehow immune.
And, as far as the potholes in your financial life—be smart. Take steps to fix them now.
To help you do just that, I wrote an e-book called “How to Put Money Worries in Your Rear View Mirror: The Financial Freedom Roadmap.” It’s free if you’d like a copy. Just email me at email@example.com, and I’ll send it to you right away.
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