There are several things one must consider when setting financial targets for the year, with financial planning being a key factor to take into account. But what can’t be denied is that it can extremely difficult to come up with an effective financial plan–it requires knowledge, expertise, time, and consistent dedication.

Pixabay/Pexels | There are several things one might consider while financial setting targets for the year, financial planning being a prominent one

At times, we are so preoccupied with other life activities and responsibilities that the mere prospect of adding more complicated things such as financial planning to our to-do list can seem despicable. This leads to unplanned expenditures or last-minute impulse purchases that are not accounted for until it’s time to submit our tax returns.

If you’d like to stay away from such monetary woes, here are three pieces of financial advice that will go a long way in securing your and your family’s future.

1. It’s preferable to save for retirement, but it’s critical to simply save

Albert Einstein once hailed compound interest as the world’s eighth wonder. According to him, a person who understands and appreciates it, is worthy of earning it. Those who don’t, simply pay for it.

Compound interest is the practice of reinvesting your profits, getting a return on interest, and assisting in the acceleration of your money’s growth. Naturally, the sooner you begin, the better. Someone who begins saving $6,000 a year at the age of 25, collects roughly twice as much at the age of 65 as someone who begins a decade later at the age of 35. There are two sidebars –  firstly, many investors begin saving for retirement at a much later stage, and secondly, no clever investing plan can substitute for a lack of capital or savings.

Joslyn Pickens/Pexels | Compound interest is the practice of reinvesting your profits, getting a return on interest, and assisting in the acceleration of your money’s growth

2. Stop attempting to predict the market

Even when we believe we are making sound, sensible judgments, we are frequently our own worst adversary. Emotions and prejudice interfere, and we can be predictably unreasonable.

According to research, the ordinary investor generates lower returns when compared to the industry’s average. This disparity is attributable to poor investor behavior, which includes timing the market, over or under-confidence, anxiety, speculation, leverage, and other factors. Successful market timing necessitates extraordinary performance in two areas: exit (selling) and re-entry (buying). You might get one of these variables correct, but it’s very seldom to time them both perfectly.

Pixabay/Pexels | Successful market timing needs great performance in two areas: exit (selling) and re-entry (buying). You might get one correctly, but seldom both

3. Prepare for the unforeseen

Many investors would much rather talk about tax and investment methods, house downsizing, and school finance than unforeseen tragedies in their own lives. In these conversations, estate planning frequently takes a backseat and is something that must be discussed in order to be prepared for tragic life events and set aside an emergency fund for unforeseen circumstances.