When getting your financial house in order, even minor changes, consistently applied over time, can have an impact. Some ideas can be implemented independently, while a financial professional might be able to help with others.
Simplify Spending Tracking
Creating a budget and sticking to it is an important step in taking control of your finances. You can determine your cash flow, track expenditures, and account for assets and liabilities on an old-school spreadsheet or with digital tools. If you want to go high-tech, there are many budgeting apps available as well.
Automate Savings
Many people struggle to prioritize saving and building an emergency fund, but automation can help. Setting and forgetting your savings strategy can help as you tuck away a bit of your monthly income without remembering to make transfers. Not only does automation remove the mental barrier of having to remove money from one account to another, but you may also be more likely to stick to the pattern when you don’t have to remember to make a transfer.
Automate Investing
Just like with savings, automating investing can make it easy and efficient to build a nest egg for retirement, put assets aside to cover education costs, or tackle other goals. When also working with your financial professional, you can determine what works best for you, your timeframe, and your risk tolerance.
Automatic investing can also help you practice dollar cost averaging (DCA). However, DCA does not protect against a loss in a declining market or guarantee a profit in a rising market.1 Specifically, DCA is the process of investing a fixed amount of money in an investment vehicle at regular intervals, usually monthly, for an extended period of time, regardless of price. Investors should evaluate their financial ability to continue making purchases through periods of declining and rising prices. The returns and principal values of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.1
Review Your Investment Strategy
Spring may also be a good time to speak with your financial professional about your current financial strategy. Together, you can determine if your investment portfolio needs to be rebalanced due to market gains or losses, whether changes to your goals or timeframes require adjustments to your strategy, or whether your overall financial situation has changed.
If you still need to create a financial plan or have questions on how to improve it, our team is ready to help. We can help you define your goals and values, then develop clear strategies to help you achieve them. Contact us today to start a conversation.
Sources:
1. Forbes, July 30, 2024 https://www.forbes.com/advisor/investing/dollar-cost-averaging/
2. Yahoo Finance, May 26, 2024 https://finance.yahoo.com/news/7-money-issues-lead-divorce-150003476.html?guccounter=1&guce_referrer=aHR0c HM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAAD-gSiSE0XJ4TWsBMPswXbQ5dvIqZd65QlTQ7IXt-m1XzrWMsaa_1 MJICs9I8f3JbANzT4n7V2tWEAP1dx0qWGul0i5wMwqthwwMKxqL0N6wGUqqXW4I_mvPqqTUNIbzHK15PB-7gsKpc3nXnYuSeR _Jup4_lqpxahaoyv7L-nWM
