Trouble is out there. When it comes to personal finance, all sorts of factors and unforeseeable events can spoil years of hard work and cost diligent individuals huge sums of money. Some issues are obvious, but others are more clandestine. After all, it’s the problem you never notice that will cause you the most agitation. And while it’s impossible to prepare for every possibility that could affect your finances, taking some time out now to study these four under-the-radar pitfalls will help you protect your financial standing under the worst of circumstances:
Unless you keep a detailed ledger of your spending habits and review them often, it’s easy to overlook impulsive purchase decisions. Indeed, impulse buys are done without much forethought (or reflection) and if you don’t build out and stick to a budget from month to month, you can easily forget how much you’ve spent on frivolous items. What’s more, impulse purchases will slowly eat away at your savings and other accounts. Though most people won’t miss $50 here or there, the accumulation of such spending over a long time will have a big impact.
Lack of Insurance
Far too many people go through life without any form of insurance whatsoever. However, even those with insurance coverage might not have the right plan for their situation. Accidents happen, and unless your insurance plan has your back when it matters most, you could end up paying huge medical bills out of pocket. Always remember to review insurance documents carefully and read the fine print!
No one gets married thinking that one day they’ll have to worry about a divorce. Yet the numbers don’t lie; couples file for divorce all the time. Unfortunately, if you haven’t signed the proper prenuptial forms beforehand, you’ll struggle to safeguard the assets you’ve accumulated once divorce proceedings begin. Talking about a prenuptial agreement with a partner is an awkward conversation for sure, but it’s one that needs to happen all the same.
Successful financial management requires a degree of caution. In the end, it’s impossible to predict how the stock market will fluctuate, if you’ll get that big promotion, or if your home will always retain its original value. Hubris, though, prevents people from considering the risks of their actions. Don’t let a few encouraging financial decisions go to your head. No investment is bulletproof, and it’s never a wise idea to leave yourself exposed without a backup plan. Hiring a professional to manage your money, speaking about your investments with trusted family members or friends, and setting aside a rainy-day fund will all help mitigate against a financial doomsday scenario.