If you’ve been watching your budget all of your life and saving diligently, you’re probably wondering how you could possibly be doing anything wrong with your personal finances. Yes, you’ve probably hit all of the basics when it comes to money management. But the problems that most people face with managing their finances are far more complex to flesh out and resolve. Let’s explore the three key things you should be looking to change about your personal finances:
Avoid These Common Mistakes with Personal Finances
- Your investing strategy is a linear one: With a linear investing strategy, you put money into an investment product and then sit back and hope for a positive rate of return. The problem is you’re relying too heavily on one investment to pull through; you cannot leverage and repurpose your money. By contrast, with a circular investing strategy, you are keeping your money moving through multiple investment products, each of which can earn you a steady rate of return.
- You are too focused on cash accumulation: Most of us are trying to hit a magic savings goal. Although it’s great to be saving money, this narrow focus on accumulating cash is doing you a disservice. You don’t know how much you’ll actually need to last you the rest of your life, and you don’t live off your cash accumulation anyway – you need to set up a steady cash flow to maintain financial security.
- Your tax liability is too high: The harder you work, the more you earn. And the more you earn, the more you get taxed. This tax liability is significantly eating away at your ability to save. The solution is to put your money into tax shelters, like a whole life insurance policy, that keep your money out of Uncle Sam’s reach.
A shift in your financial philosophy is essential to taking your financial planning to the next level. The keys are to adopt a circular investing strategy, to focus on cash flow instead of cash accumulation, and to reduce your tax liability.
For more information about how to use a whole life insurance policy to transform your financial planning, visit Paradigm Life’s section on the Whole Truth about Whole Life Insurance.