Here are some big money blind spots you need to avoid, advisors say

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107396412 1712173727793 gettyimages 154768842 is099r5f7

Managing personal finances can feel overwhelming with various considerations like budgeting, saving, debt, insurance, and shopping. It’s easy to overlook important details in the process. Here are some common financial blind spots identified by certified financial planners:

1. Credit scores: Many consumers don’t fully grasp the significance of their credit score. This number affects loan approvals and interest rates, ranging from 300 to 850. Factors like payment history and outstanding debt determine the score.

2. Wills: Wills are crucial estate planning documents that designate beneficiaries for your assets and guardianship for your children. Without a will in place, state courts make these decisions, which may not align with your wishes.

3. Emergency savings: The amount of money to set aside for emergencies varies for each household. It should cover essential expenses like rent, utilities, and groceries in case of unexpected events like job loss. Different scenarios require different savings goals.

4. Tax withholding: Understanding how tax withholding works is essential. Employees should adjust their withholdings to avoid owing money or receiving large tax refunds. Filling out a new W-4 form is necessary after major life events like marriage or the birth of a child.

5. Retirement savings: Many people underestimate the amount needed for retirement. Spending patterns may not decrease significantly, and unforeseen expenses like long-term care should be factored into savings goals. Envisioning retirement lifestyle can help determine appropriate savings targets.

Managing personal finances can be overwhelming, with various considerations like credit scores, wills, emergency savings, tax withholding, and retirement savings often overlooked. Certified financial planners highlight these blind spots and emphasize their importance. Credit scores impact loan availability and interest rates, while wills ensure assets are distributed according to one’s wishes. Emergency savings are crucial for unexpected events, with the amount varying based on individual circumstances. Tax withholding affects tax refunds and payments, with the option to adjust withholding through a new W-4 form. Retirement savings may be underestimated, with spending potentially not decreasing as much in retirement as expected. Planning for long-term care costs is also important when determining overall savings goals.

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