June 4th, 2024 | 2:07 PM MST
Written By: Teresa Milner | Senior Wealth Management Advisor with Pearl Capital Management
If you have been an adult for any length of time, you have come to learn that life has many twists and turns along the way – both positive and negative. I believe that with a firm foundation, you can be prepared for all the unexpected downturns life hands you. With a solid foundation, your recovery time is shortened and you’re able to get back on course planning for what is next.
As a financial planner I believe the most rewarding services I provide my clients is a peek into their financial future. With financial planning, I can help clients understand that the financial decisions they make today will have a great impact on ensuring a better tomorrow.
Preparing for a secure financial future involves several strategic steps along the way. Being intentional and proactive will add benefits that compound over time as your financial plan evolves along with your life. Below I list strategies to guide you towards establishing a solid foundation for your future.
Here are 5 Tips for Being Financially Prepared:
- Create and Maintain an Emergency Fund
-
- This is your financial safety net that helps you cover unexpected expenses such as medical emergencies, car repairs, home repairs, job loss, etc. Save 3-6 months’ worth of living expenses in a readily accessible, low-risk account.
-
- Pay Down Debt
-
- Credit card debt significantly hinders your financial progress, so pay it down as quickly as possible. Think about interest this way: it can either work for you or against you. When it works for you, you earn interest. When it works against you, you pay interest. Wouldn’t you rather have it working for you?
-
- Invest for Retirement
-
- This is your strategy for investing to help ensure you have enough funds to maintain your lifestyle when you no longer work. The sooner you start, the better, as you will have compounding interest on your side. Situations vary, but a rule of thumb I recommend is saving at least 15% of your income towards retirement.
-
- Diversify Your Investments
-
- As the old saying goes – don’t put all your eggs in one basket. Diversification helps reduce risk by spreading your investments across different asset classes, industries, and geographical locations. Know that across all your investments you have built a diversified portfolio that is tailored to your risk tolerance and time horizon and rebalance periodically.
-
- Build an Insurance Portfolio
-
- There are many risks in life that offer insurance as a form of protection. These risks can vary from your home burning down, to becoming disabled and unable to work, to premature death, etc. Identify the areas in your life where you feel the most vulnerable and have a discussion on which areas you feel you should insure against.
-
Once you have your personalized financial plan, it is essential for you to review it regularly and adjust as life circumstances and financial goals can change. When reviewing, evaluate your lifestyle expenses, savings, investment diversification/performance, and insurance coverage. If circumstances have changed, adjust accordingly.
Do yourself a favor and get peace of mind about your tomorrow. Do not live life by default. Planning for a secure financial future ensures you are well-prepared to meet both expected and unexpected twists and turns that will come your way.
This article was written by Teresa Milner, CDFA a Certified Divorce Financial Analyst who specializes in helping women navigate through divorce and into the next financial chapter of life. For more information, email her at CDFA@thepearlcapital.com.
