One of the most important financial journeys we can take is the path to financial wellness. Building financial security and independence, while certainly important, makes up only one slice of the whole financial wellness pie. Financial wellness also incorporates the ways that wealth and income affect our emotional and physical well-being.
Great financial planning requires you to employ two contrasting skills: Focus intently on your end objective, whether a comfortable retirement or a certain net worth; yet remain flexible for the inevitable bumps in the road. How can you balance the two? What financial tools can help you most?
Who can save for retirement these days? You can, if you know where to look and honestly assess what you can live without.
Recently I had fun with some of my undergraduate students. I asked my entire class to make a list of the wants (not needs) on which they frequently spend money. Answers varied from smartphones, cable and satellite TV, coffee shops and beverages (I didn’t press them on specifics on that one) to such grooming costs as hair coloring, pedicures and the like.
Here are my students’ average monthly expenses:
Taking care of your finances is your responsibility, but you don’t have to do it alone. An advisor, or better yet, a certified financial planner, comes in useful anytime, especially when changes in life create new financial obligations and challenges.
Below is a list of events in one’s life that make seeking professional advice a prudent course of action.
1. You have a major life transition. Marriage, divorce, a birth or a death in the family – these are some of the biggest reasons to use a financial advisor.
The world’s most powerful companies use sophisticated strategies to eliminate taxes. If you are a corporate executive, you might be able to take advantage of variations on these strategies – one of them being life and death.
Nervous retirees often worry that they might lose everything in a volatile market. Yes, if you only own one stock, you could lose it all. But if your portfolio is diversified, the majority of it remains stable like the water beneath the waves.
Market volatility is not as scary as you might think. First of all, younger retirees may have a higher percentage of equity (stocks) in their retirement income portfolio, but as they age, it shallows out. The volatile part of the portfolio from stocks decreases, while the more stable part of the portfolio from bonds increases.
Using alternative investments, beyond the usual stalwarts of stocks and bonds, is a good way to diversify. Not foolproof, mind you. They can disappoint you big-time. Here’s a guide to figure out their pros and cons.
Overinflated, bubble, imminent crash: Not words you want to hear when your money’s mostly in Wall Street stocks and bonds. If you look to diversify without sacrificing returns, the good news is that you literally do have alternatives.
Financial planning depends on your answers to a lot of questions. Some of your responses will surprise you. So will the seriousness of some of the questions.
Every possible tax deduction can help when your money is tight. Yet many available legal deductions go unclaimed each year simply because most taxpayers still don’t know the breaks exist. From eyeglasses to airline baggage fees, you might qualify for at least one often-forgotten deduction – and maybe more than one.