By Clay Elliott, CFP®, AAMS®, CRPC®
The wise person is the one who learns from the financial mistakes of others. The trick is not to become like the others.
Plant employees have my full respect for being the backbone of American industry. But when I’ve worked with plant workers in the past, I’ve noticed that many of them tend to make the same common mistakes. Let’s look at some of these mistakes and see if we can’t get to the root of the problem (see what I did there?).
1. Poor Tax Planning
Pop Quiz: Where’s the best place to keep your retirement savings?
In a traditional IRA? Traditional 401(k)? Under your mattress? A traditional IRA or 401(k) can be a great retirement vehicle, certainly, but have you ever considered a Roth account?
A Roth IRA allows you to grow your money tax-free, and you won’t have to report investment earnings on your tax return. Once you retire, you can withdraw money from your Roth account with no required minimum distribution (RMD). Plant employees can invest in both a traditional IRA/401(k) and a Roth account, taking advantage of both strategies.
2. Waiting Too Long to Plan for Retirement
Planning for retirement is a bit like dieting—many people plan to start “tomorrow.” One of the biggest financial mistakes you can make is to delay your retirement plans. The sooner you can put money into a retirement account, the more potential you have to see your finances grow over the years.
Besides, with inflation on the rise, many Americans are increasing the amount they expect to need once they retire. Historically, the typical American hoped to save $1 million or so for their golden years. Now that expectation has risen to $1.3 million. The sooner you start planning, the more potential you have to reach your retirement goal.
3. Not Having an Emergency Fund
Imagine you wake up tomorrow and your car won’t start. What will you do? How will you pay for a repair?
Sadly, many Americans lack the financial resources for these sorts of unexpected costs. But that’s committing two financial mistakes at once. First, you won’t have an emergency fund; second, you’ll be dipping into your primary savings to foot the bill.
Instead, work toward saving at least three to six months’ worth of household expenses. That way, even if the worst should happen, you won’t wreck your other savings strategy or be forced to use a credit card.
4. Underestimating the Need for Long-Term Care
Few people pay attention to the safety demonstration on an airplane because no one actually expects to need it. The same is true for your long-term care needs for your latter years.
Consider this, though: according to the National Council on Aging, the average cost of assisted living care is $4,500 per month, or $54,000 annually.
One of the most subtle financial mistakes you can make is to neglect long-term care insurance. The right policy can provide you with the support you need if and when the time comes—if not for you, then for your spouse or loved ones.
5. Neglecting an Estate Plan
What kind of legacy do you want to leave behind? If you’re not careful, your children or beneficiaries could inherit your financial mistakes. An estate plan allows you to distribute your assets appropriately while avoiding legal hassles.
Moreover, planning your estate properly can minimize your tax liability, leaving more money for your inheritors or charitable recipients. The key is to start planning ahead so your wishes are respected once the time inevitably comes.
Avoiding Financial Mistakes
Avoiding these financial mistakes is easier than you think; you just need the right help. That’s where I come in.
I can help you develop a solid financial plan that helps you prepare for tomorrow. Because who knows what tomorrow will bring?
To learn more about Oak Capital Financial Advisors, schedule a meeting by calling 225-416-7373 or emailing [email protected].
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.
Fun Stuff!
This week, we want to share the book we chose for our top recommendation, our favorite quote, and exciting upcoming events.
Book Recommendation: Atomic Habits by James Clear. In this book, James Clear explores the power of tiny habits to create remarkable results and offers insights on how small changes can lead to significant personal and professional transformations.
Quote: “The first mistake is never the one that ruins you. It is the spiral of repeated mistakes that follows. Missing once is an accident. Missing twice is the start of a new habit.” — James Clear
Upcoming Events
Valentine’s Day Open House
Join us for coffee, sweets, and love.
February 14th, 2024, 2:00 p.m. – 4:00 p.m.
Oak Capital Financial Advisors
Attire: casual/Valentines
Open houses are at our office:
4463 Highway 1 South Suite L
Port Allen, LA 70767
Everyone is welcome!
About Clay
Clay Elliott is Owner and Principal Financial Advisor at Oak Capital Financial Partners, a financial services firm based in Port Allen, LA, dedicated to providing local financial advice held to the highest standards. Since becoming a financial advisor in 2016, Clay prides himself on working toward his clients’ best interests as a fiduciary. He provides comprehensive financial planning and educates his clients to develop robust wealth management strategies to help them pursue their financial goals. He loves helping people become financially independent and enjoys seeing them live out their financial plan successfully.
Clay holds a bachelor’s degree in marketing from Louisiana State University as well as the CERTIFIED FINANCIAL PLANNER™ designation. He is also an Accredited Asset Management Specialist and a Chartered Retirement Planning Counselor.
Outside of work, Clay enjoys spending time with his wife, Claire, and daughter, Camille, playing tennis, fishing, and attending LSU sporting events. An active participant in his community, Clay is involved with The Emerge Foundation Center for Autism, the West Baton Rouge Chamber as an ambassador and member of the Governmental Affairs Committee, is a board member for the Louisiana Chapter of the Financial Planning Association and West Baton Rouge Small Business Council, and a member of Port Allen Rotary Club. He was also named Young Professional of the Year by the West Baton Rouge Chamber of Commerce. To learn more about Clay, connect with him on LinkedIn.
