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Financial Mindset Pitfalls

Mindset is often defined as “an established set of attitudes of a person or group concerning culture, values, philosophy, frame of mind, outlook, and disposition.” As with a lot of things in life, the way that we approach thinking about money may have been formed long ago, and it’s important to do a check-in and make sure our mindset aligns with what our future financial goals are. We hope you aren’t making any of the financial mindset pitfalls below but if any of these strike a nerve, just know we are here to help redirect your financial rudder in the right direction!

Being Attached to Your Savings Account Of course having liquid cash at your disposal is valuable and necessary, however, there are pitfalls for having too much available! Too much sitting in your savings account can be detrimental due to inflation and currency devaluation. But even worse than that, and if too much money is sitting in a savings account, you’re missing out on allowing that money to grow at a significantly higher rate elsewhere!

Waiting Too Long to Invest This goes hand in hand with the above point; we don’t have a crystal ball, and neither do you, so waiting for the market to be juuust right to make an investment will have you ending up wasting time and missing out on opportunities - so just start! If you just need someone to give you the push, here’s your sign 👋

Living the Luxe Life Social media has wonderful benefits, but it can be devastating to our attention span and mental health, as well as our bank accounts! It’s basically a modern ‘Keeping up with the Joneses’ situation - seeing what other people are buying, where they are vacationing, etc. isn’t always what it seems!! You may already know that, but please don’t get caught in the trap of trying to have what everyone else ‘has’ and spend boatloads of money for appearances sake. Just because someone posts a picture of the lobby of a 5-star resort doesn’t mean they are staying there 😉 Letting Credit Card Companies Take Advantage of You Buy now, pay later is a candy coated scam. Of course credit cards can offer us great perks like airline miles, cash back, etc., but do not, we repeat do not, start buying things that you can’t afford to pay off when your credit card bill is due at the end of the month. It can get out of hand incredibly fast and you’ll feel like you’re in quicksand trying to get back on your feet.

Only Focusing on Expenses If you’re on the opposite of the spectrum of ‘buy now, pay later’, you may be patting yourself on the back because you’re saying ‘hey, I’m always using coupons, sticking to a budget, etc.!’ But there’s a limit to how thin you can stretch yourself, financially and mentally…and before your friends nominate you for TLC’s ‘Extreme Cheapskates’. A better mindset is to, of course, work to cut out what you don’t need, but take that resourcefulness to the internet and learn some new skills that can make you more marketable to your employer or potential employer to bring in a bigger paycheck! There is so much that you can learn to do online with free resources at your fingertips.

Relying on Personal Willpower Most of us can relate to a struggle with willpower, and while hoping for the best will work in some scenarios, don’t rely on that alone when it comes to your finances. By using tools like an auto-draft from your paycheck to your 401k or Tax-Free savings accounts, you’re taking away the potential of you forgetting to contribute to your retirement, or the temptation to use that money elsewhere. In a lot of cases, automation is our friend! Being a Money-Hater It’s trendy to ‘Eat the Rich’ or shame billionaires these days. And it’s fine to have a differing political or ideological stance as the mega-wealthy, but the underlying sentiment feels a lot like jealousy over them having what most of us really want and need - money. Let’s face it, we need it to live comfortably and provide for ourselves and our families. Not Saving on Tax Would you rather be taxed more or less? In other words, would you rather give more or less money to the government? 🤔 Feels like a pretty obvious answer to us! What if you could just make smarter choices on where you allocate your money today and have maximum tax-free income in the future? Are you curious about your tax-free options? As always, you can set an appointment on our calendar to discuss your options!



Compass Financial Founders - Karen & Sam


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