Revisit Your Goals
Setting up long-term and short-term financial goals is extremely important, but revisiting them is just as crucial. Although there is no fixed period after which you should review your plans, you may want to aim at intervals of 6, 12, or 24 months. This timeframe will heavily depend on your life circumstances, and it may change over time. For instance, you may have a child, get a new job offer, or buy a home. Events such as these can deeply affect your financial plans, and after these events you might need to revise your main goals. It is very important to diversify your goals and to make sure they cover a wider timeframe – you do not want to live by short-term objectives only. The same rule applies to the type of financial products that you have invested in, and you should make sure they mature at both short and long intervals. Lastly, always use a budget. This is particularly helpful with large-scale goals such as buying a property, opening a college fund, or saving for retirement. Without a budget, overspending and credit card debt are more likely to occur.
Update Your Emergency Fund
Whether you live alone, with your spouse, or have children, you must do your best to plan for unexpected expenses. There are many benefits associated with tracking an emergency budget, which may often outweigh the disadvantages of the emergency itself. As life keeps changing, your financial plans should change too. Your emergency fund should cover at least three to six months of living expenses. Alternatively, saving 5% to 10% of your paycheck can give you a comfortable safety net. You may also want to consider high-yield savings accounts since a higher interest rate will make you accrue more money, especially as your savings increase.
Review Your Retirement Plans
A retirement plan is an essential part of our financial portfolio, so it should be checked and updated regularly as needed. Oftentimes, financial goals change. You may go through a life emergency, or you simply decide to increase your financial risk and make higher profits. Regardless of the situation, it is always important to review your retirement plans, tailoring them to your saving goals, planned retirement age, and investment preferences. You may decide to move money from a high-performing but high-risk asset to a lower-risk asset or vice versa. Take time to review your portfolio to see if your investment strategy fits well with your current life situation. Always keep an eye on fees, as you do not want to spend a high amount of your savings on investment-related costs.
Save When Possible
Last, but not least, putting money aside will always benefit you in the long run. Try to be as consistent as possible with your savings, distributing your resources into retirement accounts, college funds, and all the other sections of your portfolio. Make sure you do not get distracted by debt repayments – saving for the future should be just as important as paying off your dues. A helpful trick to keep your savings active is to set up automatic contributions. You should also take advantage of free annual credit reports and check regularly to make sure your investments are safe from identity fraud and scams. Ultimately, try to spend less than you earn. Instead of increasing your living standards, increase your savings – it is never too late to start thinking about your future and your loved ones.
Are you staying on top of your finances? Are you using the right instruments to meet your planned goals? Reviewing your investment portfolios and overall financial plans regularly is extremely important, especially given the uncertain times that the world has been through over the past year. Stay informed and adjust your investment strategies to support your financial life in the best way – just like a health checkup! M C Bank also offers Individual Retirement Accounts for our personal banking customers. Contact your local branch to find out more today!
This article is not to be construed as tax advice. Always consult with a tax professional.