Uncertainty is the name of the game right now. Between an ongoing pandemic, global unrest, and political instability, we have daily reminders of just how unpredictable life can be. When unpredictability gains steam, we start seeing shocks to the stock market and the economy, as evidenced by increasing inflation, unemployment woes, supply chain issues, and plenty of volatility in the market. If all these ups and downs have made it hard for you to make decisions or plan for the future, you aren’t alone. As we navigate continually uncertain times, here are 5 money moves you can make to feel a little more prepared for whatever comes next.
1. Strengthen Your Emergency Fund
As the old proverb says: “Prepare the umbrella before it rains.” Building an emergency fund is the same as preparing the umbrella—it’s the foundation of financial preparedness. Generally, you should have enough money to cover 3-6 months of basic living expenses (mortgage, utilities, groceries, etc.). This money should be held in a highly liquid account so it’s readily available should an emergency occur. Look for an account that offers a competitive interest rate. You worked hard for that money, now put it to work for you.
2. Watch Your Spending
If the emergency fund is the umbrella, then budgeting and tracking expenses are the sturdy rain boots you wear when the storm clouds come rolling in. Tracking spending habits can be difficult, especially in trying times, but thankfully there are several apps that will do it for you. Once you have a good idea of where you currently spend money, you can begin to build a budget around where you want your money to go. This can be modified as needed as time goes by and life changes so that you are better prepared to withstand potential fluctuations in income.
3. Manage Risk
Risk management is a great way to safeguard what you’ve already built. Unmanaged risk can mean the difference between maintaining an ample emergency fund or not having enough when you need it the most. Be sure to review your insurance policies, taking care to bring them up to adequate coverage levels. This should include life, health, auto, and homeowners insurance at a minimum, but disability, umbrella liability, and long-term care coverage should be considered as well. These risks are often overlooked and can be devastating to a financial plan. Making sure you are adequately covered now will save you time, money, and energy in the future.
4. Evaluate Your Investment Allocation
Investment allocation and risk tolerance are important factors to consider when assessing financial preparedness. If your investment allocation does not align with your risk tolerance, it can lead to unwise investment decisions. It’s common for people to feel worried when they see their investment values fall during a financial crisis, but a properly diversified investment allocation specifically tailored to your level of risk tolerance can alleviate quite a bit of the stress surrounding market volatility. This helps to keep you invested through the downturns so you can benefit from the potential growth when the market eventually recovers. In this case, “stay the course” is tried-and-true advice, especially if you have a long time frame before retirement and a sufficient emergency fund to get you through difficult times.
5. Partner With a Financial Advisor!
It’s always wise to enlist the help of a professional who can provide objective advice—especially when it comes to something as important as your finances. Making smart financial decisions doesn’t have to be difficult or overwhelming, and we at Favor Wealth are here to help you along the way. If you’re ready to take the next step in your financial journey, we’ll be here to walk with you through all of life’s most unexpected hurdles. Contact us at (626) 529-0445 or email Ricky directly at email@example.com to schedule a no-obligation conversation.
Ricky Biel is founder, wealth manager and Chartered Retirement Planning Counselor℠ professional at Favor Wealth, an independent financial advisory firm serving individuals and families near Pasadena, California. Ricky Biel founded Favor Wealth with a desire to provide unbiased, client-centered, community-based financial advice. Ricky and his team of caring, smart professionals want their clients to feel like they’ve done them a favor, making it easier than ever to accomplish their financial goals by blending proven investment methodologies with creative financial technologies. He is on a mission to help his family of clients feel both a sense of relief and excitement about their future. Favor Wealth takes care of their clients’ needs first and foremost and goes the extra mile to make their clients’ finances grow. To meet and see how the Favor Wealth team may be able to help, contact them today at (626) 529-0445 or email Ricky directly at firstname.lastname@example.org.
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