The Dangers of Wishful Thinking About Your Finances

At some point, you must bite the bullet and make a financial plan for the future.

Financial health is important, even if you enjoy seeing the world through rose-colored glasses. Photo by Ron Lach

(SALEM, Ore.) - "Look on the bright side" is probably one of those things you've heard more than once throughout your life, along with perhaps "think positive".

While it's certainly better to try to approach your life from a position of positivity rather than negativity, the problem arises when that becomes both the beginning and the end of your actions.

It's true that everything may work out for the best in the end, but that's unlikely if you aren't taking some actual steps to make the best happen.

Below are a few of the ways you may be letting a sunny attitude substitute for real action and sabotaging your finances along the way.

Not Looking at the Numbers

This can result in a range of behaviors, from throwing away past-due notices and ignoring debt collectors at one extreme end, to simply not bothering to make a budget or pay attention to where your money is going on the more benign end of things.

However, even if you have anxiety around the topic of your finances or know that the news about them is going to be bad, in the long run, this only prolongs the agony.

At some point, you must bite the bullet and look at what you have coming in, what's going out, and what your debts and assets are so that you can make a financial plan for your future.

Thinking of Investing as a "Someday" Thing

You'll do it when you get a raise or when you get your finances in order or when you have time. What you may not realize is that you can start investing with as little as $100 and that it can take very little of your time if you sign up with an online brokerage account and let a robo-advisor do most of the work for you.

If you want to be more hands-on and have more money to spend, real estate investing is a great way to grow your wealth. You can start by doing research on such things as the historical growth and future developments in the neighborhood around the property you're looking at. Then you can look at other criteria, including the capitalization rate.

You can review a guide on calculating the cap rate to help you figure out whether a property is the right investment for you.

Not Thinking About Retirement

You might assume that you need the money more now. But when it's farthest in the future is when it's most important to put away money because that money will grow enormously thanks to the power of compound interest. However, even if you're middle-aged, it's not too late to open a retirement account and start saving for your future.

Source: Salem-News.com Special Features Dept.