money-mistakes_web.jpgNo one is perfect. We’ve all made our shares of missteps when it comes to money management. Most financial advisers have seen some of the familiar mistakes, i.e. buying stock on a whim or refusing to shop around for insurance, but some mistakes are very hard to recover from. In fact some money mistakes could take you down financially to the point of ruin.

Here are the top 10 biggest financial mistakes that could ruin your life and ways to avoid them:

1. Not saving enough: “I wish I hadn’t saved so much money,” said no one ever.  The median net worth of families in this country excluding home equity is under $25,000.  Unfortunately too many people in this country live paycheck to paycheck, failing to save any money at all.

2. Saving too late: Too many people procrastinate to start saving for retirement.  If you save $200 per month for retirement starting at age 35 and it grows by 9 percent you will accumulate $461,000 by age 65.  If you had started saving $200 per month at age 25 you would have had about $1.2 million by age 65.

3. Not enough life insurance: Many people don’t have adequate life insurance coverage. If you make $50,000 per year, $250,000 may sound like a lot of life insurance.  But would you trade your lifetime of future earnings for only $250,000? Probably not. A good rule of thumb is 10 times your salary.  As you approach retirement you can lower the amount.

4. Not enough disability insurance: For most people, their most valuable asset is their ability to earn money through work. How would you live if you were unable to work due to sickness or injury? According to the Social Security Administration, a 20-year-old in 2011 had a 30 percent chance of being disabled for at least six months before retirement.

5. Not maxing out your 401k: The easiest way to save is through a payroll deduction. You don’t even have the temptation of spending the money because it never even hits your bank account. Plus you get a tax deduction for contributing.  Also see mistake No. 1.

6. Lack of discipline with investment strategy: Retail investors are notorious for underperforming the market. Create an investment strategy using stocks and exchange traded funds. Keep adding to your investments every month and don’t bail out every time the market drops.  Be consistent and disciplined.

7. Making poor career choices:  We all only have one life. Don’t waste it on a job that you don’t like or doesn’t pay enough. Almost all financial mistakes can be cured with more revenue. When you choose a job (or perhaps your own business), think long term. Where will that job lead you in five years? If you don’t like the answer, don’t take the job.

8. Carrying balances on high interest credit cards: Consumer credit card debt is the most toxic of all debt. Don’t buy what you can’t pay for at the end of the month. The high interest rates associated with these credit cards will keep you in the poor house.

9. Not having a budget: So many people I meet don’t have a good grasp on what it costs them to live each month. Look at your bank statements.  How much are you spending? Where are you wasting money that could be going to build your net worth?  If you stick to a budget you will be more successful at building wealth.

10. Not having a plan: Most people go through life worried about paying their immediate monthly bills.  However they fail to plan for their children’s education, their retirement and other future expenses.  Creating a plan is the first step to financial success.

Keith Singer is a financial advisor at Singer Wealth Management in Boca Raton. He is the president of Keith Singer Wealth Management and Insured Returns LLC. A licensed Florida attorney, he has earned the Certified Financial Planner (CFP) designation. He received a B.S in Finance from the Pennsylvania State University and graduated cum laude in 1992 from the University of Miami School of Law.