By Brent Weiss, CFP®
Co-Founder and Chief Evangelist of Facet Wealth
Quick question: How much do you have in your savings account? How much debt do you carry? What’s your plan for paying it off? What’s your plan for retirement savings? Are you using the best kind of account to fit your plan?
If you don’t know the answers, you’re in good company: A TD Ameritrade survey found 60% of adults don’t know how much money they need to fund their lifestyles by age 65. Today is National Financial Awareness Day, and there’s no time like the present to pause and take stock of your financial life.
If you don’t know where to begin, don’t worry: here are four principles you can start applying today to cultivate a better understanding of how you use your money.
1. START WITH THE SMALL STUFF. If you’re worried about what investment strategies will fulfill your retirement plans, but you have outstanding debt like student loans or credit cards, chances are you’re putting the cart before the horse. Start with just one item on your list of immediate goals. It could be as simple as starting a budget, unsubscribing from video streaming services you no longer use, or creating a plan to pay down your debt. Commit to learning about a new topic periodically. You will quickly become more knowledgeable about your finances—and especially what is best for your situation. Don’t worry if you start small. The important thing is to start!
2. PLAN, PLAN, PLAN. The single biggest mistake individuals and families make is failing to come up with a plan for their financial lives—or to update it as goals and priorities change over time. A plan that was relevant to you 10 years, a marriage, and a child ago may not be the best fit for you now. This is a great time to think about what you want to accomplish and lay the groundwork for a revised plan. Start by writing down your goals and then prioritizing them. Gaining clarity about what you want to achieve is a tremendous step in the right direction.
3. TIMING IS EVERYTHING AND THE TIME IS NOW. Whether you are paying down debt, saving for a new home, or investing for the future, your most valuable asset is time. The sooner you start paying down your debt, the less interest you will pay. The sooner you start investing for retirement, the greater the effects of compound interest on your long-term returns. Money compounds over time. Starting to invest early allows for more compounding. Always make sure your portfolio is well-diversified and risk appropriate for your situation. Don’t wait for the “perfect” market conditions to begin investing. Start now—there’s a reason they say “It’s not the timing of the market, it’s the time in the market.”
4. SEEK ADVICE FROM AN EXPERT. Many people assume that you have to be a millionaire in order to afford financial advice. We built Facet Wealth to refute that notion: we believe everyone deserves access to affordable, comprehensive financial planning. Advances in technology and service models make it possible for people who couldn’t get the attention of traditional wealth managers to benefit from real financial planning from a dedicated CFP® Professional. When you face high-stakes financial life decisions, don’t be afraid to call for backup! These are the situations in which a financial planner’s guidance can be invaluable.
Let today be a day to learn more about your finances, no matter where you are in life. We believe it’s never too late to start planning for the future… and it’s never too late to start learning, either.