4 Mistakes I’ve Made With My Own Money As a Financial Planner

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  • Being a financial planner doesn’t make me immune from making mistakes with my own money.
  • I try to learn from my mistakes though, like the times I didn’t plan ahead for big expenses.
  • I’ve also hired an accountant and rebalanced my portfolio to lower risk, which I wish I’d done before.
  • Read more from Personal Finance Insider.

I’ve been a financial planner for a year now, and have definitely gained a much better understanding of my finances and how to set (and achieve) my money goals. But, like everyone else, I’m capable of making some money mistakes.

I try not to live with too many regrets, and remember that making mistakes along the way can serve as a lesson to learn and improve. Here are my four biggest money mistakes, so you don’t have to make the same ones I did.

1. Not planning ahead enough for big expenses

There are plenty of unexpected costs that pop up along the way — a doctor’s bill, an unplanned trip, an annual insurance premium that slipped your mind. I recently had to pay over $150 to dry clean all my sheets and clothes when I thought I had bed bugs (I ended up not having them, so now I just have a super-clean wardrobe).

But there are other expenses that you know are coming up, expenses that are big enough to be real budget-busters when not planned for properly. While I do regularly set aside money for emergency savings each month, I have found myself dipping into that account for an expense I had plenty of time to anticipate.

For example, I recently switched jobs and took a two-week break in between roles. Even though I knew the time off was coming, I found myself pretty unprepared for how much money I was spending, especially when there was no income coming in during that time. I ended up using some of my emergency fund to bridge the gap before I started my new role.

Your emergency fund is just that — money specifically for emergencies. Using it for non-emergency reasons can make you less prepared if a real emergency rolls around.

Maybe you’re also taking time off between jobs, or are planning a vacation, or are thinking of buying a new computer. Spending just a little bit of time mapping out all the associated costs and seeing how those costs fit into your current budget doesn’t take much work and can help you make a plan in anticipation.

My next big expense in the coming months is moving — and this time, I think I’ll be much more ready.

2. I didn’t develop a resilient enough investing plan

The most common investing advice? Diversify. Having a mixture of different stocks and bonds in your portfolio helps you weather the market ups and downs.

Determining the allocation of your portfolio largely depends on your risk tolerance and financial goals. I’ve been investing for years, and have a fairly high appetite for risk. I’m also fairly young, so most of my portfolio is in aggressive growth stocks.

During 2020, I began to spend more time researching and investing in individual stocks and specific sector funds, and less time reviewing my entire portfolio and rebalancing it as needed. What’s more, I invest on a number of different platforms, so I often forgot to consider my entire portfolio when weighing diversification.

By the end of 2021, my portfolio was quite unbalanced and heavily invested in large-cap growth stocks. I didn’t give it much thought at the time — especially when the markets were doing exceptionally well — but recent market


volatility

you have exposed the downside to my appetite for risk.

My portfolio has definitely taken a hit in the past few months, reminding me of the importance of preparing for the rain while you’re still in the sun. If I had taken the time to better diversify my portfolio last year, I would likely be much better protected.

3. I didn’t hire an accountant

Not everyone needs an accountant. If you’re just an individual with a single employer and few investments, you’re likely to better off handling it yourself.

But for those like me with more complicated taxes, hiring an accountant could save you money, time, and stress.

I freelance — and because I didn’t have an accountant, I managed all my own invoices, tracked payments, and paid estimated taxes on my own. Each tax season, I received a collection of 1099 forms to submit.

While I have a good understanding of how taxes work — thanks to my CFP certification — I still could slip up. Last year, I had to file an amended tax return because I forgot to report income.

This year, I made sure not to make the same mistake again and hired someone. Accountants can help you maximize your tax deductions, calculate your estimated taxes, and track your deductions.

I’ll admit, it’s pretty nice to not have to track my own invoices anymore.

4. I was too strict with myself

Personal finance is just that — personal. For many people it can be a sensitive subject.

For me, money was a constant source of anxiety. I would track and manage every dollar going in and out of my account to feel a sense of control over my financial future, and would often feel guilty after an impulse purchase.

I often spent too much time worrying about the numbers in my bank account and less about what really mattered — experiences with those I love.

While having financial goals, like saving and following a budget, are extremely important, so is enjoying your life! I like to think of money as a tool, it gives me the freedom to buy new things, have new experiences, and spend time with those who matter.

In becoming less strict with how I tracked my money, I began to see money less as a goal to reach and more as a way to achieve what I want, bringing more happiness and fulfillment into my life.