By Mark Sievers, MBA, CFP®, AIFA®, CIMA®, CIMC®
Eleanor Roosevelt once said, “It takes as much energy to wish as it does to plan.” I think this quote speaks to the fundamental importance of taking a proactive approach toward achieving goals, and it can be aptly applied to the financial planning world. Over the years, I have found that when faced with the challenges that wealth brings, many people don’t know where to start or what to do to regain a sense of control over their finances.
I saw this in my own life after the loss of my father-in-law and the difficulty our family faced in settling his estate. I saw firsthand the stress and devastation simple financial mistakes and lack of planning can cause. It inspired me to start my firm, Epsilon Financial Group, with a mission to help clients make sound financial decisions.
I believe the foundation of making sound decisions starts with being aware of the common financial pitfalls that many people experience. Here are the three most common financial mistakes I’ve seen over the years and what you can do to avoid them.
1. Not Tracking Spending Patterns
By far the most common financial mistake I see is being unaware of spending patterns and having no mechanism for tracking expenses. This can create huge issues in your financial world. Even as your wealth increases, you may find yourself still living paycheck to paycheck and not understanding why. It is a common tendency for people, no matter how much income they generate, to spend most, if not all, of what they earn, creating a situation in which money controls you instead of the other way around.
Establishing sound financial habits such as building a budget, reducing spending on discretionary expenses, and saving a portion of your income every month can help to ensure you are setting yourself up for success in the future.
2. No Clear Goals or Objectives
Many of our clients come to us asking for help making sure they “have enough” to retire comfortably. This is a great concept in theory, but it’s not very clear or measurable. It’s difficult to achieve something if you don’t have a way of measuring success. Lack of clear goals can also lead to piecemeal decision-making and less motivation to stick to the plan.
Defining your financial goals and setting realistic objectives along the way are the first steps in working toward a comprehensive financial plan and securing your future. At Epsilon Financial Group, we guide our clients in defining, prioritizing, and tracking their goals, so that they can see tangible results along the way.
3. Reactive Planning
A crucial element of planning is the idea of being proactive, or trying to understand and think through the consequences (good or bad) of a decision before making that decision. A common mistake I’ve seen clients make is operating in a reactive manner, where important financial decisions are made before working through the implications in the context of the entire financial plan.
This can be challenging from many perspectives, including tax planning and management of cash flow. It is important to collaborate as a team when working with a financial advisor so the plan can be adjusted in real time and tailored to your specific needs. Putting in the time to fully analyze a decision up front will save you time, energy, and money in the future by ensuring you’re making sound financial decisions.
How We Can Help
Planning for the future doesn’t have to be complicated or confusing. Our team at Epsilon Financial Group walks our clients through the entire financial planning process, from defining and prioritizing goals to budgeting and tracking expenses.
If you’re making any of the mistakes I mentioned, or would like help regaining control over your finances, we would love to hear from you! Email me at Mark@wealthmatters.com or call (707) 428-5500 to get started.
Mark is President and founding principal of Epsilon Financial Group, Inc., an independent, fee-only wealth management firm. With over 35 years of experience, Mark strives to help his clients make sound financial decisions and navigate complex financial situations. Mark is passionate about providing services that add value to his clients’ lives and help them achieve financial peace of mind as they pursue their goals. He is known for his extra efforts and first-class service on behalf of clients. Mark has a bachelor’s degree in engineering from the U.S. Air Force Academy and an MBA in finance from the University of California, Berkeley. He is an Accredited Investment Fiduciary Analyst® (AIFA®), Certified Investment Management Analyst® (CIMA®), Certified Investment Management Consultant℠ (CIMC®), and CERTIFIED FINANCIAL PLANNER™ professional. To learn more about Mark, connect with him on LinkedIn.