Here are 5 financial wellness moves you need to master this year!
(BPT) - If you had to grade your financial literacy, what would it be? Are you an A+ saver, investor and planner, or do you think you could do better? If you grade yourself average at best, you’re not alone.
When asked to grade their own financial literacy, more than half of Americans say they’d earn a “C” or lower, according to new data from Prudential Financial. This isn’t surprising, considering data from Prudential’s Financial Wellness Census shows less than half of Americans are on track to meet their financial goals, including planning for retirement.
“Regardless of where you are on your family’s financial wellness journey, the best way forward is through financial literacy,” says Prudential Advisors President Brad Hearn. “Researching, educating yourself and getting advice from a financial professional can help you make the best decisions based on your life stage, risk tolerance and goals.”
Hearn says each family’s situation and goals are unique, and things like life stage and personal preference will impact how they choose to prepare for their financial future. To get started, here are five financial wellness basics every family should master:
Set up an emergency fund
Life is a series of experiences, and sometimes the unexpected can hit your finances hard. Whether it’s a car breaking down, your AC unit on the fritz or even losing a job, it’s important to be prepared for emergencies. If you don’t already have an emergency fund, start saving a little each month until you reach your goal. A good rule of thumb is to have three months’ worth of expenses saved in an emergency fund. So, if your monthly expenses are $2,500, you should have $7,500 saved.
Create a budget
Saving for college? A new car? How about starting that emergency fund? Whatever your family’s financial goals are, it’s important to have a plan in place that helps you achieve those goals. Budget to manage day-to-day expenses, and include in that budget a commitment to save for bigger milestones. For tips on getting started, do some research. There’s no shortage of advice, whether you decide to go it alone or consider using the help of a professional financial advisor.
Plan for the unimaginable
If you have people who count on you for financial support or caregiving, you should have life insurance. A life insurance policy can help give your family financial peace of mind should the worst happen. There is no rule as to how much life insurance you need, but important things to consider are your annual income, mortgage debt, potential college costs for kids and other future financial obligations.
Save for retirement
According to Prudential data, of Americans who have retirement savings and debt, nearly one-quarter have more in total debt than in retirement savings (23%), while 15% of Americans say that they have no debt, but also have nothing saved for retirement. Planning for retirement is something that should start as soon as possible. If your work offers any type of matching program, make sure to take advantage. If you don’t, you’re essentially leaving free money on the table.
Seek professional advice
Retirement, life insurance and savings can be confusing. Information overload is partly to blame. According to Prudential data, two-thirds of Americans agree that the list of things they need to learn to successfully manage their finances keeps growing, not shrinking. That’s where financial literacy programs and professional financial advice can play a key role. Nearly two-thirds of Americans don’t have a financial advisor. They say they cannot afford one (42%) or don’t believe their financial situation warrants needing an advisor’s help (26%). The reality is that advice is more within reach than ever before — and it’s not just for the wealthy. A financial professional can help at various stages in life and work with you to create a strategy based on your timeline, risk tolerance and goals.
“Financial wellness isn’t always a matter of having more money,” says Hearn. “Instead, it’s a journey that takes a combination of proactive effort, dedication and professional guidance.”
Prudential Advisors is a brand name of The Prudential Insurance Company of America and its subsidiaries. Life insurance is issued by The Prudential Insurance Company of America, Newark, NJ and its affiliates.
(BPT) - There is great unrest in the financial universe. The next disturbance in The Force is anyone's guess. Like the rebels in the forthcoming Star Wars film Rogue One, you seek a new hope. Fear not and reach for a promising investment future.
I. Look to the setting suns.
In Episode IV: A New Hope, a moisture farmer named Luke Skywalker contemplates his future as two suns set. Great challenges loom ahead. Preparations are critical. The same is true of your financial future. Do you have an emergency fund? Are you on track for retirement?
TIP: You must be looking now to see what can happen later.
II. The Force will be with you, always.
The keys to investing success lie inside you-though you shouldn't go it alone. Envision what you'll encounter. Create a strategy to meet those demands. Ask yourself:
* How much can I contribute
* In which areas?
* What does victory look like?
* When will objectives be met?
When fear for the future emerges, seek advice. In Star Wars, Jedi knights guide apprentices. All lean on master Yoda.
TIP: Navigate challenging times with an advisor or representative at your financial institution.
Before dangerous missions in Star Wars, the rebels convene. Strategy is detailed. Difficult questions are asked. Consensus is reached. Regarding your investment plan, perhaps it's time to re-evaluate your budget and increase monthly contributions to your portfolio.
"Schedule time on a quarterly basis to review your portfolio's performance," says Kevin Driscoll, vice president of advisory services at Navy Federal Financial Group. "It's a great idea to involve your financial advisor in this process. A second opinion can provide perspective and help you identify areas for improvement."TIP: Plans tend to impact others, so be sure to communicate and collaborate.
IV. Diversify your attack.
An effective strategy in battle employs multiple fronts. In Star Wars, missions combine air and ground tactics. Investing also incorporates "divide and conquer." Experts recommend investing in diverse assets: stocks, bonds, certificates, real estate and more.
TIP: To diversify your portfolio, invest in stocks and bonds across a variety of business sectors.
V. Stay in formation.
Your portfolio will be tested. Be mindful. In Star Wars, Jedi are trained to draw close to each other when threatened. Remember no matter how poorly an investment is performing, history shows the market corrects with time.
"When the market dips, purchase more shares with the same dollar amount. When the market spikes, your owned shares increase in value," Driscoll explains. This investing method is called dollar-cost averaging. It lowers the average cost of shares over time.
TIP: Avoid watching the market too closely. Resist the urge to bail on an asset. Invest consistently, with the long view in mind.
VI. Don't go rogue.
In Star Wars, The Empire has built a vast portfolio of assets on Darth Vader's watch. He offers enticing rewards to bounty hunters who support his regime. Your mission in financial planning is to resist the ever-present temptation to go rogue. Don't be seduced by others' success. Don't jump when a friend asks you to invest in his can't-miss venture (unless his goals align with yours).
TIP: Record your investment plan in writing, which firms up the details. When tested, fall back on the document.
VII. The saga will have many episodes.
Despite your best intentions, some investments will succumb to the dark side of market forces. Remember investing takes patience and fortitude. Like most journeys, the story of your portfolio won't be told in a single chapter.
TIP: Avoid making an investment decision when your emotions run hot or cold.
If there's an example in Star Wars of what not to do in investing, it's Han Solo. He didn't believe in market forces (at first). At times, he struggled to manage obstacles. As we saw in Episode VII: The Force Awakens (and as early as Episode IV: A New Hope), Han didn't take debt seriously. Collectors were after him at every turn. In Episode VI: The Empire Strikes Back, his assets were frozen. Your destiny can be simpler. You don't have to be a swash-buckling smuggler. A moisture farmer from a remote desert outpost can make sound financial decisions toward prosperity.
Retirement is supposed to be a reward for decades of hard work, but if you haven’t planned well, the milestone may be a dark cloud on your horizon. New data shows that nearly 50 percent of Americans are most afraid of outliving their income or the inability to maintain their current lifestyle, and nearly 20 percent are worried about having enough money to cover health care expenses. Take control of the uncertainty and create peace of mind when it comes to retirement with these simple steps.
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