The Biggest Financial Mistakes I See

By Jeff Gilbert

Life is hectic. If you’re like me, you run around day after day trying to finish a to-do list that never ends. This infinite to-do list is loaded with tasks we know we should do but can never seem to find the time to do them.

One of these neglected tasks is taking time to examine our financial health and make sure we aren’t making mistakes that will come back to bite us down the road. Unless we are constantly reminded of these common financial mistakes (and their consequences), life tends to take over and we forget.

Well, today I’m giving you a friendly nudge. Here are the three biggest financial mistakes to avoid—mistakes that are easy to make but that have huge consequences.

1. Failing To Set Up A Will And A Trust

One mistake I often see with new clients is that they don’t have a will or a trust set up. Nobody likes to think about accidents or death, but if you fail to set up these documents, you’re putting the well-being of your loved ones at risk. Let me explain.

A will is a document that gives instructions on how to distribute your assets when you die. It also indicates who will become the legal guardian of your minor children. Without a will, you are leaving this all up to chance—not a good idea! So, unless you are single, broke, and have no kids, you need a will.

A trust is another document used to transfer your estate when you die. Depending on your situation, a trust could make the asset distribution process faster (and less expensive) for your beneficiaries. The best way to find out if you need a trust is to speak with a financial advisor. 

2. Waiting Too Long To Start Saving

When you’re young, life is complicated. You’re busy studying, starting a career, finding a life partner, raising kids, and frantically trying to squeeze in a social life. That’s a lot of time, energy, and expenses. And unfortunately, it usually means your retirement plan is put off until “someday when things settle down a bit.”

This common mistake has serious consequences.

If you wait until mid-life to start saving for retirement, you lose your most powerful wealth-building tool: time. Every year you wait to contribute to a retirement account is a year less of compounding interest.

Whenever I ask people why they waited so long to start, it’s usually related to procrastination. “Oh, I’ll start contributing to that Roth next year when I have fewer expenses.” But then one year turns to two, two to five, five to 10—and before they know it, they’re 45 years old with zero dollars saved for retirement.

Please don’t do this!

3. Not Having A Plan

The last critical mistake I see is when people move through life without a financial plan. They have no written road map outlining the steps to reach their short-term and long-term goals. Many times, they don’t even know what those goals are!

Here’s a hard truth: You can’t just save some money here and there and hope for the best. It doesn’t work that way. This path leads to disaster. If you want to build the wealth needed to reach your lifestyle goals, you first need to define those goals, and then you must work backward to create a step-by-step plan.

This is exactly what we at Balboa Wealth Partners help our clients do. If you’re interested in a no-obligation conversation about how we can help you design a personalized program to reach your financial goals (and avoid the above mistakes, among others), give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

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How Much Life Insurance Do You Need?

By Jeff Gilbert

Life is full of unpredictable events. If you start thinking about everything that could go wrong, you’ll give yourself gray hair and a hefty dose of anxiety. That’s where life insurance comes in. It may not solve all your worries, but it does protect your loved ones if the worst-case scenario becomes a reality.

But knowing you need life insurance is only the tip of the iceberg. Life insurance can be complicated and is not a one-size-fits-all product. Everything from the type of insurance you get to the amount of coverage you receive will depend on your unique situation. Even though there’s no exact formula, here are a few questions you can answer to help you evaluate your life insurance needs.

Is It Necessary?

Not everyone needs life insurance. If you have enough money saved so that your death would not create a financial hardship for your loved ones, an insurance policy might be an unnecessary line item in your budget. If you are a single young adult with no dependents, you may only need a small policy to cover the expenses of a funeral and burial. Take a good hard look at your financial situation and decide if life insurance is the right fit for you.

Permanent Or Term?

Now that you have an idea of how much coverage you need, you’ll need to choose the kind of life insurance that is most appropriate for your situation. Here’s a breakdown of the two primary types of life insurance.

Permanent Insurance

Permanent insurance is coverage that is not limited to a specific duration of time, meaning it can potentially last your entire life. There are several types of permanent insurance, including Universal Life, Indexed Universal Life, and Whole Life. The benefit of permanent insurance is that it can last longer than a term policy so that a death benefit will be paid to your beneficiary no matter when you die (assuming your policy has been funded properly). This type of insurance is typically more expensive than term insurance.

Term Insurance

Term insurance offers coverage for a specified length of time, which can be anywhere from 10 to 35 years. The downside to term insurance is that it only covers you for your specified length of time, so if you pass away after the term is over, no death benefit is paid to your beneficiary. But depending on your situation, you may only need insurance for a certain time period—until your kids are grown or you have enough money saved to avoid financial hardship. One of the major benefits of term insurance, as opposed to permanent, is that it is usually the most inexpensive out-of-pocket option.

What’s My Ideal Coverage Amount?

Finally, the question at the forefront of your mind. Here’s how to dig into the numbers to calculate how much coverage you need to protect your family adequately. 

The DIME Method

Conduct a needs analysis by separating your finances into different areas:

  • Debt and final expenses
  • Income
  • Mortgage
  • Education costs

In addition to these areas, two of the biggest factors that affect how much insurance you need are your marital status and your financial dependents. The more people depend on you, the more coverage you need. 

Multiply It

After calculating and totaling each of those dollar amounts, apply an income replacement multiplier to determine your needed coverage amount. The multiplier varies based on your age and the status of your home mortgage. For example, if you’re under 50 years old, you can likely use a multiplier of 20. Older couples may be able to use a multiplier of 10 or 15, depending on the number of years left on their mortgage. 

Keep in mind that these are just guidelines designed to give you a general idea of the amount of insurance coverage you need. There may be adjustments for your particular situation and what makes the most sense for your family. 

Put It All Together

You now have a sheet of paper with a lot of different numbers on it. Here’s how to put it all together.

  • Combine your annual income (plus the multiplier), your mortgage balance, your debt load, estimated future financial needs, and death expenses. 
  • Then subtract your liquid assets (think savings, life insurance policies you already hold, any college funds, etc.).
  • The number you end up with should give you a general idea of how much insurance you should buy. 

Now What?

If you’re ready to take the plunge into life insurance, it can be helpful to talk to a financial professional and review your options. Our team at Balboa Wealth Partners is experienced with insurance policies and can offer you guidance on the products available to you and how they can integrate into your other financial strategies. If you have questions about your life insurance policy or would like to schedule a review or discuss your options, give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.