We all do it – things we don’t feel prepared to think about get put on the back burner until they disappear or become urgent and pressing issues! This should be the year you stop procrastinating about your financial plan! Before you dive headfirst into the process, though, there are some things to think about as you get started:
Look at your expenses and your debt. Take a look at your core living expenses (such as a mortgage payment, car payment, etc.). Can any core expenses be reduced? Investing aside, you position yourself to gain ground financially when income rises, debt diminishes and expenses decrease or stay (relatively) the same.
Maybe you should pay your debt first, maybe not. Some debt is “good” debt. A debt is “good” if it brings you income. Credit cards are generally considered “bad” debts. If you’ll be carrying a debt for a while, put it to a test. Weigh the interest rate on that specific debt against your potential income growth rate and your potential investment returns over the term of the debt. Of course, paying off debts, paying down balances and restricting new debt all works toward improving your FICO score, another tool you can use in pursuit of financial freedom (we’re talking “good” debts)!
Implement or refine an investment strategy. You’re not going to retire solely on the elective deferrals from your paycheck; you’re going retire (hopefully!) on the interest that those accumulated assets earn more over time, plus the power of compounding.
Manage the money you make. If you simply accumulate unmanaged assets, you have money just sitting there that may be exposed to risk – inflation risk, market risk, even legal risks. Don’t forget taxes! The greater your wealth, the more long-range potential you have to accomplish some profound things – provided your wealth is directed. If you want to build more wealth this year or in the near future, don’t neglect the risk management strategy that could be instrumental in helping you retain it. Your after-tax return matters. Risk management should be part of your overall financial picture.
Request professional guidance for the wealth you are (or could be) growing. A good financial professional should help to educate you about the principles of wealth building. You can draw on that professional knowledge and guidance this year – and for years to come!
Ken Toops Financial Advisor
SWBC Investment Services Located at Florida Credit Union
352.377.4141 x 4072 | firstname.lastname@example.org
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