With the advent of the new year comes the opportunity to reinvent yourself, and reinvest in your business ventures. It also comes with the potential for massive, horrible, earth-shatteringly bad decisions that even the most astute entrepreneur can commit if they’re not careful. And while we can’t guarantee that 2018 will be a flawless year financially, we can at least point out the five economic gaffs you should definitely avoid this new year:
Easy right? Except it can be difficult to know when you’re overspending. You might think you have enough cash tucked away to afford a new car or to build the dream deck for your backyard, but ask yourself about how you’d deal with an emergency? Do you have three or more months of money to live off of at your access? If the answer is no, reconsider the Corvette, and put off the home remodel for a time when you really can afford it.
Not Doing your Homework
Was 2017 a successful year for year? If so great, but don’t go spending your hard-earned capital willy-nilly. If you plan on making a big investment, give it your time and attention. You wouldn’t buy a cafe without first discussing restaurant financing options, would you? Nor should you dive into a major financial purchase without first giving it due diligence. This is basic stuff, but overconfidence can lead to silly decision making –– even among the calmest heads.
Just because things have gone well lately, doesn’t mean they’ll always be so fiscally productive. Don’t assume your assets will always retain their value. The only constant in the financial world is change. And just because one stock, business, or investment is riding high now, doesn’t mean it always will.
When is too early to start saving for retirement? It’s a trick question, because it’s never too early. But it can definitely prove too late. If you eschew setting money aside in a savings account or, in a 401k, to try and capitalize on short-term opportunities, you’ll likely be leaving yourself exposed years down the line.
The worst mistake is to let one mistake snowball into a cache of errors. If you’ve made a bad investment, or spread yourself too thin with your spending, don’t play the denial game. Don’t shut yourself away, and pretend to yourself –– and your loved ones –– that everything is “okay.” It might be a tough conversation to have, but facing your financial situation is the only way to improve it.