Take stock of these 8 financial tips for 2024
What does it take to be financially healthy?
How can you achieve your financial goals and protect your assets? Today, many people (including 79% of millennials and Gen Zers) get financial advice from social media platforms, but that may not be a good approach for something as important as your financial future, which needs to be tailored to your needs and goals.
It can feel overwhelming to wade through various financial sources and tips, so here are eight pieces of financial advice.
Start with a solid financial plan. It’s essential to take a “big picture” view of your financial goals and determine how you can achieve them. This means assessing your current financial situation and your short- and long-term financial goals (e.g., “buy a house within five years” or “travel extensively in retirement”).
Work with a financial expert that provides a comprehensive, integrated, big picture approach, considering estate planning, retirement income planning, business exit planning, etc. The right advisor can help you develop a personalized financial plan to help you reach (and exceed!) your goals.
Protect yourself (and your assets). Have proper protection in place in case you get into an accident, get sued or develop an illness. This means having the right types of insurance coverage in the proper amounts, including medical, disability, long-term care and life insurance. It might feel unpleasant to think about, but what happens if you’re unable to work because of a serious illness or injury? The proper disability insurance will provide you with income.
Secure all necessary legal documents. Proper legal documents — including a power of attorney, living will and trust — are essential in case you’re injured, incapacitated or die. Business owners also need a business continuity agreement. These documents are essential, even if you’re young and healthy. For instance, a will allows you to name guardians for your dependent children and, without it, the courts may decide who’s responsible for your kids if you and your partner die. Also, if you were sick or injured and unable to take care of your finances, who would pay your mortgage and handle your financial affairs? A Power of Attorney lets you appoint a person to manage your finances if you’re unable to do so.
Save money. There’s a mantra that says, “Pay yourself first,” and that’s true. Build up savings so that an unexpected event — an illness, urgent home repair, job layoff, etc. — doesn’t financially derail you. Divert a percentage of your salary (ideally, 15-20%) directly into a savings account. Once you get in the habit of saving money each month, you’ll build it into your monthly budget. Be disciplined, keep your financial goals in mind, and watch your savings grow.
Be forward-thinking. Don’t just think about “now”; think about the future. For instance, don’t just own stocks. Build other revenue streams that will provide income, regardless of market fluctuations. Also, don’t automatically load up on tax-deferred opportunities, like 401(k)s. What if you need money before you can access these tax-deferred accounts at age 59?
Separate your personal and business accounts. Business owners often combine their business and personal accounts, but maintaining balance between your personal and business assets makes you more flexible and sets you up for more successes in the future.
Focus on what you can control. There are many things that could impact your finances that are out of your control, including inflation, stock market fluctuations and changes in tax law. You may feel powerless when you see your grocery bills soaring and your investments take a major dip due to market volatility.
Instead of worrying about things you can’t change, focus on what you can control. Have the right investment mix that diversifies your portfolio and accounts for inevitable market swings. Make mindful choices about where you spend. Do you really need to upgrade your vehicle every few years? Can you manage lifestyle spending better? Develop a thoughtful — and realistic — budget and stick to it. Focusing on things you can control can help you feel less powerless and more confident about your finances.
Find the right financial expert. Get referrals from family and friends. Interview experts and check their references. Ultimately, select a knowledgeable, experienced financial professional that you like and trust.
An overwhelming amount of information exists about the “right” ways to manage your finances, and it can be challenging to cut through all the noise that’s available online and off. For instance, think of financial experts on television who ask people to call in with their financial questions. If someone calls in and asks whether they should buy a particular stock, the expert is giving advice in a vacuum. They don’t know anything about the caller’s specific financial situation or their goals, so how can they advise about whether a certain stock is a wise investment for them? Instead, work with a trusted financial advisor who knows your goals and can help you follow these tips to build a healthy, strong financial future.
Joseph H. Guyton is principal of The Guyton Group in Portsmouth.
