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Everyone makes mistakes including your parents.
And some mistakes are more expensive than others.
Growing up, I saw my parents make some bigfinancialmistakes, said Rhett Stubbendeck, founder ofLeverage Planning.
They lost a lot of money and wiped out a significant portion of their savings.
What are the most common mistakes that can ruin generational wealth?
Avoid these pitfalls if you want topass an inheritance on to your own children.
Too Little in Emergency Savings
Everyone needs an emergency fund.
Exactly how much depends on the stability of your expenses and the stability and security of your income.
Set aside too little for emergencies and theyll derail your finances when they inevitably strike.
Andy Ellis fromPosh UKsaw this firsthand with his parents.
They didnt think about how things could go terribly wrong and we enjoyed a comfortable life.
But when my father got sick, it changed everything, Ellis said.
It turned everything upside down for all of us and it financially ruined my family for a long time.
They had no savings or backup plans and everything fell apart pretty quickly, he said.
They spend up to the limit, living paycheck to paycheck.
Some people simply give too much of their money away.
However, one mistake they made was to be too generous in trusting other people.
Rahimis parents ran afoul of this as well.
The business didnt turn out to be that successful and we lost a huge amount of money.
Of course, investing in nothing at all can be just as costly as making mediocre investments.
This is one of the reasons why I became a financial expert.
Inadequate Insurance
Ellis blames a lack of insurance for part of his parents financial woes.
There wasno life or disability insuranceto fall back on when my father became sick.
Stubbendeck saw the same calamity take place in his own family growing up.
Another mistake was not havingenough insurance coverage.
When my father had a severe health crisis, the medical bills piled up quickly.
Without proper health and life insurance, the financial burden was heavy on our family.
This taught me the importance of comprehensive insurance, he said.
Renee Fry, CEO ofGentreo, spells out the scope of the problem.
Set aside at least six months worth of living expenses, Stubbendeck said.
This buffer provides financial stability during tough times.
Protect against unexpected events by havinggood health, life and disability insurance, he said.
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