Do you cringe at the thought of someone else taking control of your finances? Like how to spend your money, where to save/invest, etc.?
Arguably, one of the biggest reasons people are hesitant to work with a financial advisor is they don’t want to “give up” control of their finances.
Well, what if we told you that doesn’t have to happen?
As financial advisors, we not only help you visualize your ideal future but also help you work through the steps to get there. And, we do this by not “taking control” of your finances. Instead, we help you leverage the tools at your disposal to put you in control of your financial future.
But that future doesn’t come fast or easy.
Unfortunately, there isn’t a quick fix to level up your money. Some people want a “get-rich-quick” scheme or to become overnight millionaires, but the likelihood of this happening is low and subject to chance. That's not the way we do financial planning.
The truth is that it takes work, discipline, and time to build wealth, and there aren’t “cheat codes” to get your money to the next level.
But you’re in luck! We’ve devised 4 ways to help you get tangible results and elevate your wealth-building journey (no cheat codes required).
Let’s jump in.
- Taking your money to the next level relies on viewing your finances holistically
- Your personal values and goals should be at the forefront of all of your financial decisions
- Not every financial strategy is going to work for you, so it’s key to find and zero in on the ones that do
- Not having a clear, comprehensive financial plan can lead to financial burnout
#1 Stop Trying To Do “Everything.”
With the rise in popularity of investing apps, and interest in cryptocurrency (and investing in general), we’re seeing more and more people talk about their finances and share their techniques at the dinner table, water cooler, Twitter feeds, etc.
While accessible financial information and discussions can be excellent, the potential problem lies in the age-old question: “how much is too much”?
- Did you hear about a stock or performance metric that works well for your friend? Should you also invest?
- Are you filled with envy looking at your friend's trips abroad on social media? Is it time for you to buy your ticket?
- Are all of your co-workers spending thousands of dollars on NFTs? Maybe this will help you get rich?
You might be struggling to keep your head above water with all these financial ideas, but how do you know which ones are right for you?
Know Thyself (And To It, Stay True)
Socrates said it best, “to know thyself is the beginning of wisdom.” And in Shakespeare’s Hamlet, he famously writes, “to thine own self be true.”
Understanding your goals, values, and vision for the future is a great way to cut through all the noise you experience talking to friends, watching the news, or reading trending stories.
Remember, not every financial strategy will be appropriate for you and your goals. So, it’s important to self-reflect on your values and find the right method(s) to achieve them.
For example, your friend may have been able to pay off their credit card debt by not going out for food and drinks for a few months. This logic might not work for you if you have more or less debt than them or can redirect cash flow rather than cutting things out.
Or, your co-worker invested in a risky stock (like Bed Bath and Beyond) and sold their shares for a juicy profit. But the market isn’t about “winning big,” and crossing the line to timing the market could expose you to greater risk and losses long-term.
Trying “everything” will likely stall your progress and make you less likely to continue on the right path for you. Why? Because it can be taxing and frustrating when you don’t wake up with a hefty account balance after embracing a top trend.
By heading down the road of fads and trends, you risk wasting money, time, and future progress.
#2 Have A Clear, Comprehensive Financial Plan
This likely comes as no surprise, but there isn’t a “one size fits all” approach to financial planning.
Your financial goals and priorities are unique to you, and your plan must also be custom.
In tandem with avoiding trying “everything,” it’s also important to not rely on piecemeal financial strategies.
You might be using a piecemeal approach if you are addressing issues as they arise rather than being proactive and looking at the bigger picture.
Another way you can slip into this approach is by “copying and pasting” best practices you’ve found through your own research, tips from family and friends, etc.
The reality is that this type of financial strategy isn’t sustainable long-term. The best anecdote? Having a clear, comprehensive financial plan.
As adults, there’s a lot we have to manage, and that’s an understatement!
Burnout results from excessive and prolonged mental and physical stress, affecting your mental and physical health, so you want to avoid it.
How does this relate to your finances? Since you already have a full plate without managing your finances, you might not have the mental capacity or time to manage your money in the comprehensive way you need to.
The Recipe For A Sustainable Financial Plan
While this isn’t a definitive plan to fit everyone's needs and goals, working through these steps is a great start.
- Set financial goals aligned with your values
- Create an intentional spending plan that helps you get results
- Build an emergency fund
- Start planning and saving for retirement early
- Consider investing beyond your 401k
- Create an estate plan
- Monitor your plan and make changes based on shifting priorities, life transitions, and new goals.
Why is it so important to start with setting goals? The idea behind it is thinking toward the future while also considering your immediate needs.
#3 Put Your Goals First
If you think about it, a lot of the financial advice you may see or hear is backward. Let’s elaborate.
If you start with the idea that you have to make or save a certain amount of money before you create savings goals, it’s likely not the best way to use your efforts. Rather, start with your goals and “reverse engineer” a saving, investing, and spending plan that matches your needs.
This idea applies to short and long-term goals. Here are some examples of each.
These goals are a great way to lay a foundation, like little habits that add up to significant results. Setting long-term goals may feel intimidating, especially if you don’t know where to start.
Let’s take a look at some examples of short-term goals.
- “I will set aside $150 each paycheck to contribute towards my emergency fund. My goal is to have my emergency fund equivalent to 3 months of my salary and living expenses within 2 years”.
- “I’ll prioritize paying off my credit card debt from the highest to lowest interest rates. My goal is to have my debt paid off within the next year”.
- “I’m going to meet with my employer's human resource department to ensure I’m maximizing my employee benefits. I will schedule this meeting before open enrollment to make necessary changes”.
- “I plan to set aside $200 each paycheck to put a down payment on a house in 3 years”.
Long-term goals may seem intimidating, but they don’t have to be. Remember, the earlier you start working towards your goals, the longer you have to achieve them. And these types of goals take time!
Here are some examples of long-term goals:
- “I want to set aside $250 per month into a 529 savings plan for my child’s college education”.
- “I’ll max out my employer-sponsored retirement account, so I have the best chance of earning long-term dividends.”
- “I’m going to refinance my mortgage to pay off my home within 15 years”.
You’ll notice that all the examples we’ve given you have some things in common: they’re “SMART.” To dive deeper into setting SMART goals for yourself, check out this blog.
After you set your goals, it’s time to work towards reaching them. One of the best ways to do this is to remember the greater purpose behind your money.
# 4 Bring Purpose Back To Your Money
At AVID Planning, we focus on creating a holistic view of your finances. How do you do this? By creating a Purpose-Driven Money System.
This system helps you answer, “how can I make my money work for me”? The key is to focus on the bigger picture and give purpose to your financial goals by spending time and money in the areas that give your life meaning.
Diving deep into your values, daydreaming about what your “10” looks like (aka your ideal life), knowing the importance of being consistent, and realizing that adapting is okay and necessary.
Because, at the end of the day, your money needs to work for you. You work hard and deserve to live a life that brings you joy and fulfillment.
If all of this seems overwhelming to you, don’t stress. A financial advisor can help you navigate this process and create a Purpose-Driven Money System that pushes you towards achieving your financial goals and living a fulfilling life. Good things take time, and your finances are no exception.
If you’re ready to take your money to the next level, please schedule a time to meet with us, or stop by our office in St. Petersburg, Florida. We’d love the opportunity to work with you.