081514-Wealth3-Bad Habits

When it comes to saving, things can get a lot more complicated than clipping coupons and knowing how to balance a checkbook. For many, adopting bad routines can stop the balance in your bank account mid-climb. Three area financial advisers spoke to LN about bad habits they see that can prevent you from building wealth—and how to break them.

Brad Jenkins

Wealth adviser

Buckingham Asset Management

Having unnecessary debt. Living beyond their means is one of the biggest mistakes I see people do. Things like student, car or home loans are necessary debt. Going out to eat or spending money you don’t have is unnecessary debt. If you’re spending too much, you’re not saving.

Not taking advantage of retirement-fund matching programs. If you’re at a company that matches your retirement plan, make sure you’re participating at least as much as what the company matches, because that’s free money. If you don’t have a company retirement plan, have the money taken out of your paycheck so you don’t even see it, or set it up so that it’s automatically taken out of your savings account right after it’s deposited.

Not diversifying investments. If all your eggs are in one basket, and something happens to that basket, it’s going to hurt a lot more than if they were spread out. It’s better to lose 10 percent of your savings than all of your savings.

Sherry Delo

Founding principal and president

Delo Advisors

Not saving. I have preached this for my 30 years of practice: You must save. I’m a proponent of people just having one credit card for convenience. They can overwhelm and catch up with you.

Investing poorly. There are two ends of the spectrum: investing too conservatively, or investing too aggressively. A bad habit that people fall into is not putting enough into stocks, particularly after we’ve been through the greatest recession we hope to see in our lifetime.

Not enjoying your savings. The first thing I advise is to create an emergency fund, of three to six months of income, in case something happens to your current income. That creates a sleep-at-night effect. Then I encourage people to save for their goals, and then to enjoy life. If you use money to do happy things, that cultivates a saving philosophy, and you don’t tire of saving.

Nick Fafoglia

Senior portfolio manager

The Commerce Trust Company

Not planning. By working with an investment adviser to create an investment-policy statement, people can assess the amount of risk that’s appropriate for them, and create long-term goals.

Making decisions based on emotions. When I work with new clients, I ask how they reacted when the markets were really bad in 2009 to 2011: Did they panic and sell, or stay focused on long-term goals? People tend to worry about losing money, and end up selling at the bottom, only to later buy at the top. Keep emotions out of investment goals.

Paying too close attention—or not enough—to finances. Less is more for most people. If they look at their investments and the markets every day or every week, they’ll probably think short-term. We encourage people to stay engaged, but only really focus on looking at things on a quarterly basis to make sure everything is in order.

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