Similar to taking care of your personal health by proactively incorporating healthy habits and annual checkups, you can also take control of your financial health when you are proactive and engaged in managing your finances. And also like your physical and mental health, your financial health requires an ongoing commitment and focus in order to get results.
Regardless of your stage in life, it’s important to establish certain habits that can put you in the position to be able to reach your financial goals, whether that’s a vacation, a college fund, savings for a rainy day or a successful retirement.
There are a few universal tips to consider as you establish and maintain your financial health.
- Determine your financial goals: You have to know where you want to end up to know the way to get there. The goal can be as short-term or ambitious as you need it to be, at this moment in your life. Maybe it’s creating a budget to be able to have more money to save. Or maybe you’re looking ahead at what you’ll need for a happy retirement. Either way, you need to look ahead and establish the goal and create the timeline to reach it.
- Create a financial plan: You wouldn’t expect to lose 10 pounds without evaluating your diet and exercise and then tweaking either of those to create results. Similarly with financial health, you need to evaluate your current financial situation, and then develop a financial plan that can help you work toward your goal. That includes the need to consider your current budget, projected income, investments and other factors so that you can create your personal roadmap to a well-planned financial future.
- Revisit your financial goals: Your financial goals can–and should–reflect your life circumstances. Family additions as well as career or health changes can change the demands on your finances, altering your outlook and objectives. Make it a point to re-examine your financial goals at least twice a year.To the same point, revisit your investments as well. Over time, market fluctuations can tip the balance sheet. At least once a year, consider rebalancing your portfolio so you can be assured you are staying on the right track with your long-term objectives. But keep in mind, rebalancing your portfolio may have tax implications.
- Enroll in your 401(k): If your employer offers a 401(k) plan, enroll as soon as possible so your money has a chance to grow. Contributions are tax-deferred, and most employers make matching contributions: That’s free money for you. Contact your employer or plan administrator for specific information regarding employer match requirements and vesting schedules. Saving as much as you can while you are working is an easy habit to establish and an effective way to pursue your retirement goals.
- Stay the course: Markets can be volatile, and it’s easy to overreact to every change. But it’s important to remember to maintain a long-term investment outlook. One potential way to manage risk over time is to maximize your contributions in a diversified portfolio that is rebalanced through up-and-down markets
- Turn to expert advice: Finally, just like your physical and mental health, experts can play an important role in getting results. An independent financial advisor can help you to establish your financial health today so that you can work toward your financial aspirations for the future.
voiced in this material are for general information only and are not intended
to provide specific advice or recommendations for any individual.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Michael Milam is a registered representative with LPL Financial. He can be reached at 818-550-9955.
This material was prepared for Michael Milam’s use.