Shape Your Financial Future with These 5 TipsMay 29, 2019
As mothers, business-leaders, and innovators, women are shaping the future.
But as we pour ourselves into our passions, sometimes we neglect the future of our own hard-earned dollars.
It’s time for us to take action! The question is how. In honor of Mother’s Day this year, we’re celebrating with 5 powerful pointers.
Ready to take charge of your financial future?
1. Craft your financial vision by setting clear goals
Like getting yourself to the gym on a Monday morning, beginning the financial planning process is the hardest part. So, start by asking yourself 3 key questions:
- What are the financial goals that I would like to achieve?
- How much will it cost to attain each goal?
- What’s my timeline for completing each goal?
Financial goals can take many forms. Want to start your own business? Fund your child’s college education? Purchase a home? Begin by writing these goals down, estimating the costs, and setting priorities and timelines.
This list is where it all starts. Welcome to your financial vision!
2. Build an emergency fund
While we do our best to achieve our financial goals, life doesn’t always go as planned. Your car breaks down. A loved one becomes ill. Your house floods.
Sometimes we’ll do anything to avoid thinking about a potential crisis, but a little bit of thoughtful preparation can make a world of difference.
To make sure you’re always prepared, begin setting aside some funds in an easily accessible (also known as “liquid”) account where you won’t be penalized if you choose to withdraw. This could be a savings account at a bank or a money market fund.
Your future self will thank you for giving yourself a little cushion, if only for the peace of mind.
3. Don’t leave your retirement plan on the back burner. Start saving now!
Out of sight, out of mind. Retirement can feel distant, but good retirement planning is absolutely fundamental for any financial plan — especially for women. A woman who retires at 65 can expect to live another 20 years, which is 2 years later than a man’s average life expectancy.
Whether you’re already saving or just getting started, remember that retirement doesn’t look the same for everyone. For starters, a retirement plan factors in your estimated retirement budget (don’t forget about inflation!), the age you plan on retiring, your debt, and how much you can currently contribute.
That means your retirement plan may not look the same as your neighbor’s retirement plan. If you’re unsure about anything—like what your plan is invested in, the risk of these investments, or how much you’re paying in fees—consider speaking to a financial advisor. Understanding your plan is as important as having one!
Do you have a retirement plan that’s collecting dust? Peek at our blog to gain inspiration and help your retirement plan flourish.
4. Know your investment options
Once you’ve crafted your goals and begun to build your emergency fund, it’s time to assess how to begin achieving your vision. By evaluating your different investment options, you have the power to create a portfolio that aligns with your goals.
Equip yourself by becoming familiar with some key investing concepts, like:
- Asset allocation: this is how much you allocate to different asset “classes,” like stocks, bonds, and cash. Your goals and investing strategy determine how much you allocate to each class.
- Diversification: ideally, this is a risk-mitigating strategy that mixes a variety of investments within your portfolio to avoid putting your eggs all in one basket.
- Investment risk: This comes in many forms, but it boils down to one thing — the degree of uncertainty and potential financial loss that comes with an investment decision.
Understanding these investment concepts gives you an entry point into understanding your different investment options. Knowledge is key! So, let’s set you up for success. But remember, the financial industry is full of jargon, so if you don’t understand something, say so! Advocate for yourself and your future by asking questions.
5. Get the family involved in the finances
Whether you take charge of the books or your partner takes the lead, involving the whole family can be invaluable.
As you’re learning about investment concepts yourself, consider teaching them to your family, too. Not only will family conversation lay the groundwork for a future of smart financial decision-making, it will reinforce what you’ve learned and bring to mind important questions you hadn’t thought to ask.
Talking about finances together can also prevent a heavy burden that you hadn’t anticipated. In the event of a death of a spouse or a divorce, having a strong understanding of your family’s financial condition can protect you and your family in hard times.
Don’t be afraid to ask for help.
From identifying goals to wading through the investment options, financial planning can be overwhelming. Know that you’re not alone — as financial advisors, we can help you build a plan from the ground up, or just serve as an extra set of eyes on the plan you’ve already built.