Four Mistakes to Avoid in Your Money Plans for 2024-25

02.04.24 11:59 AM By Yogesh Bhandari

When it comes to managing your money in 2024-25, it's important to avoid some common mistakes. By doing so, you can feel more confident about your financial journey and set yourself up for success in the long run.

The saying goes, "The best time to plant a tree was 20 years ago. The second best time is now." As the new financial year begins, it's like a fresh start. We often want to manage our money better to reach our goals, but sometimes things don't go as planned. Financial decisions, especially when we don't have all the information or when we spend money unexpectedly, can lead us off course.

Let's start the year 2024-25 right by avoiding these common mistakes and becoming smarter with our money.

1. Not Checking Your Money Plan Regularly

Think of managing your money like going on a road trip without a map or GPS. You might get lost or end up somewhere you didn't plan. Your money plan shouldn't be something you create once and forget about. It should change as your life does. The new financial year is a good time to look at your plan and make any needed changes.

Here are some things to think about when reviewing your plan:

Changes in how much money you make and spend: Did you get a raise or start a new job? Are you spending more because of a growing family or new things you want? Updating how much you make and spend will help you decide if you need to change how much you save.
Progress on your goals: Are you on track to reach your short-term and long-term goals? If not, what can you do to get back on track?
Changes in your life: Did you get married, have kids, or something else important happen? These things might mean you need to change your money plan, like getting more life insurance.

2. Investing Without a Plan

Imagine trying to cook a good meal by throwing random ingredients into a pot. The result might not be what you wanted. Investing without a clear plan can lead to not making as much money as you could.

The important thing is how you divide your investments. This is called asset allocation. You decide how much money to put in different things like stocks, bonds, or real estate. The right mix for you depends on how much risk you're comfortable with, when you want to use the money, and what you want to do with it.

Here are two mistakes to avoid with asset allocation:

- Not thinking about how much risk you're okay with: Are you okay with maybe losing some money to maybe make more later? Knowing this helps you decide how to divide your money.

- Only focusing on one goal: Many people have more than one goal for their money. Your plan should think about all your goals, not just one.

3. Changing Your Investments Too Often

The stock market can go up and down a lot in a short time. But over many years, stocks usually do better than other things you can invest in.

So should you change what you've invested in?

There are times when it's good to make changes:

Balancing things out: Over time, how much your investments are worth can change. Balancing your investments helps you keep them the way you want. It's good to do this maybe once a year.

Big changes in your life: Like we said before, big things happening in your life might mean you need to change how you invest.
When something isn't doing well: If one of your investments is always not making much money, or if it doesn't fit with your goals anymore, it might be time to change it.

Forgetting About Insurance

Just like life changes with the seasons, your insurance needs change too. It's good to check your term life and health insurance every so often.

Do this every year:

Checking your insurance can be smart, especially when you're looking at your money for the year. Here are some things to remember:

Big moments in your life: Did you buy a house or have a new baby? These things might mean you need to change how much life insurance you have.

Money changes: If you got a new job or a promotion, you might need to change your insurance. Make sure it still fits with your money situation.

Feeling safe: Having enough insurance means you can focus on what matters most - spending time with your family and feeling good about the future.

By being careful with your insurance, you can make a safety net that helps you feel confident as you go through life's changes.

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