In most aspects of our lives, taking action serves us well. We are conditioned from a young age to believe that if we want to succeed at any endeavor – climbing the corporate ladder, excelling at a sport, being a great parent, getting good grades – we must work hard, make tough choices, and put in the time. We need to act because actions lead to results.
This urge to act is why we are all so tempted to make changes to our investment portfolios based on the news of the day or cocktail conversations. But when it comes to our finances, it’s not always prudent to act; we should only act when it will have a positive impact on our overall financial well-being. After all, that is what it is all about – making sure that nothing derails our ability to meet our financial goals. Here are some things you can do, actions you can take, to bring you closer to meeting those goals.
Preserve
- Reduce debt – pay off high-interest loans.
- Cut unnecessary costs – cancel memberships and subscriptions you don’t use.
- Negotiate and reduce costs – shop around for insurance and other costs that seem to creep up each year.
Prepare
- Establish or increase your retirement plan contributions. The more you invest in retirement (or similar goals), the better you can employ compound interest and market returns to accelerate your efforts.
- Be sure your Emergency Reserve is adequately funded. It’s great to be investing in tomorrow. But in an emergency, you may need cash today. Be sure to set enough aside, so you won’t need to take costly loans or sell holdings at inopportune times.
- Revisit your estate plans. Even if you have already established your estate plans, it’s prudent to periodically revisit them, as well as your beneficiary designations on your retirement accounts.
Simplify
- Declutter your portfolio management. Over time, most families end up with a confusing array of investment accounts across multiple custodians. Where possible, organize your accounts across fewer platforms and consolidate when possible so you can more efficiently and effectively manage all the moving parts.
Learn
- Advance your financial literacy. Books, podcasts, blog posts… we have many recommendations that we will gladly share with you.
- Educate your kids. Budgeting, goal-setting, spending … instill the financial basics early on to strengthen your kids’ future financial independence, as well as your own.
- Talk to your aging parents or adult children. A few simple conversations can enhance your understanding of one another’s goals and values and reduce unnecessary expenses when making multigenerational financial decisions.
Delegate
- Consider working with a fiduciary advisor. A fiduciary advisor that can help you integrate all aspects of your financial well-being will not only increase the likelihood that you will reach your goals, but will provide you with great peace of mind.
You see, your instincts are right – you should act and you should be in control when it comes to your finances. The key is to make sure you are taking the right actions to further your own financial well-being. Make the proactive decision to focus on these action items and it will serve you well – no matter what direction the markets move.
