Estate planning is sometimes thought of as something older, more established individuals engage in when they have kids to worry about and significant assets to protect. While it is never too early to start thinking about comprehensive estate planning, it is also important to be aware of and avoid some very common financial mistakes that can occur at any age and end up significantly impacting your estate plan and the assets you are able to leave behind to your heirs. Recently, The Huffington Post ran an article discussing some of these common financial missteps. Some of them are included below, and being aware of them can help make sure you understand their significance and can take steps to avoid them. This is not an exhaustive list, but an experienced estate planning attorney can work with you in making sure that your finances are moving in the right direction in order to support the estate planning objectives you have set for yourself.
Breaking Your Budget
Vacations and treating yourself are fine ways to enjoy your hard-earned money. However, it is important to make sure you incorporate these things are part of a well-balanced budget so that you don’t completely drain your savings and find yourself in need of resources that are no longer there. Creating a safety net for emergencies is a good way to make sure you can handle unexpected expenses that could appear out of the blue. You may be hit with medical bills, a family emergency, car repairs, or even loss of a job. Planning ahead will help you navigate these obstacles much more successfully.
Investing is an important part of successful financial and estate planning. However, investing without a comprehensive plan for your investments can lead to disaster, including large losses in the principal you have chosen to invest. Equally as dangerous to your financial health is failing to invest at all. When the time is right for you to begin investing, make sure you have some realistic goals in mind for your investment portfolio. What role will it play? What is your investment objective in the short- and long-term? How much are you comfortable losing while still feeling secure in your investment assets?
Not Communicating with Your Family
You may want to keep your financial matters private. Doing so is fine, to a point. It is important to engage in open and honest discussions about finances, financial planning goals, and estate planning with everyone in your family that has a stake in those things. You can avoid overlapping or redundant activities and make sure that each person that has a seat at the financial table is using their resources in the most positive and productive way. Communication is an important part of a dynamic approach to financial and estate planning. That does not mean that everyone needs to know everything, but you need to have a dialogue.
Delaying Estate Planning
One of the most important aspects of securing your financial planning objectives is to make sure that you do not delay engaging in comprehensive estate planning. Life is unpredictable, and after investing the time and money financial planning involves it is important to make sure that you have taken the steps necessary to protect your assets. As your estate grows because of smart financial planning, you may find the need for a more diverse and dynamic estate plan. It is never too early to speak with an experienced estate planning attorney about your estate planning options, and delaying that conversation can be one of the costliest mistakes you can make when it comes to responsible financial planning.