Financial empowerment is about having control over your finances so you can confidently pursue the life goals that matter most to you. Whether you’re saving for a new home, planning for retirement, or preparing for life’s unexpected challenges, feeling secure in your financial decisions is essential. These five tips can help you take control, align your spending with your values, and gain the confidence to achieve your financial dreams.
When you have better control over your finances, you’re better prepared to achieve what you want to in life. No matter how you feel about money or how much experience you have managing it, turbulent times (like market downturns) can make anyone feel a little out of control when it comes to finances. That’s especially true if you haven’t experienced previous financial strife.
Given all that, how can you feel more empowered over your finances, so you can take steps to achieve what you want to in life? These 5 tips can provide a great start.
1. Do a financial wellbeing checkup.
It may sound basic, but concerns about money often result when you don’t have a good handle on your finances. A financial checkup will reveal where you stand right now, giving you the information and insights to feel better prepared to make good financial decisions.
A financial wellbeing checkup involves looking at the whole picture:
- How does your income compare to your expenses?
- What is your cash flow like each month?
- How much do you have saved or invested?
By looking at your money in total, you’ll have a solid base for deciding how to move forward. If one person in the household is in charge of organizing the finances, the other party should request visibility of the accounts and review the expenses as a household, so they are working together instead of feeling like one spouse is making the money decisions.
2. Document your goals.
Since money is central to many of your life goals, it’s important to pause from the busy-ness of life, give thought to your values, and use those to document your goals. Who you value (family, friends, etc.) and what you value (traveling, security, etc.) can you determine what your goals really are and how you envision the near future and your retirement.
Think about what you hope to accomplish in the next few years. Are you saving to fund a wedding or a new home, or hoping to take time off from work to raise children or care for aging parents? Or is retirement just a few short years away?
Now consider what’s further out on the horizon. For most people, funding a secure retirement tops the list of long-term goals. But what do you envision retired life to look like, and at what age do you hope to stop working? Given that women tend to live longer than men on average, it’s important to build a nest egg that may need to carry you through several decades of retirement.
3. Know where your money is going.
Do you know exactly where your money goes each month? If the answer is “no,” you’re not alone. Tracking expenses isn’t something most of us enjoy doing. But if you don’t know where your money goes, you’re less likely to feel confident about your finances.
As you look at your spending, consider whether it’s consistent with your values. Often, people find they’re unintentionally spending money in ways that don’t align with what matters most to them. It can be an eye-opening exercise! Year-end credit card statements that categorize your spending can be helpful here. Once you know where your money is going, you can adjust your spending to stay on track with your goals.
Knowing where you’re spending also can help you avoid lifestyle creep: the tendency to spend more just because you’re earning more. Lifestyle creep can take a big bite out of your budget and make it tougher to achieve what you want to in life.
4. Know how you’re invested.
It’s easy to put your investments on the back burner. Maybe you chose a few funds for your 401(k) when you joined the company, but you’ve never revisited those choices. For example, it’s common for people to select a target date fund or a frequently-used mutual fund for their 401(k) without considering whether it’s the best option based on their tolerance for risk and how long they plan to work. If you’ve changed jobs a few times and left a 401(k) account behind every time, you might not have a good view into your total retirement portfolio.
It’s also important to assess where you’re invested outside your retirement plan. There are lots of options, including Exchange-Traded Funds (ETFs) and mutual funds, for putting your money to work to reach your goals. And given today’s escalating inflation and relatively low interest rates, holding onto too much cash might not be the best choice. It’s important to see that your investments are low-cost, as high fees can diminish returns.
By understanding how you’re invested, what other options are available, and how it all fits with your goals and how you feel about risk, you’ll gain better control over your finances.
5. Find a financial advisor you can connect with and trust.
Most people don’t think about hiring a financial advisor until they experience a significant life event, like marriage, divorce, loss of a spouse, or a major career move. But at any stage in life, a financial advisor can help you assess your financial wellbeing, identify your goals, track your spending, and understand both your current investments and other options to consider.
The key is to find the right advisor for you. Of course, you want an advisor who is highly experienced developing financial plans that help women find financial empowerment. But you should also look for an advisor you can trust and relate to personally. After all, when it comes to talking about finances you want to feel comfortable and at ease!
As you assess financial advisors, ask how they’re compensated. Some receive commissions for recommending or selling financial products and services. This might bias their recommendations. Others are fee-only advisors whose only compensation comes from client fees. Why choose a fee-only financial advisor? They can offer objective advice because there is no potential conflict between the recommendations they make and the compensation they receive.
How a Team Hewins Advisor Can Help
If you’d like to feel a better sense of control and empowerment when it comes to your finances, turn to the professionals at Team Hewins. Our fee-only financial advisors have extensive experience developing customized financial plans that can help women achieve their life goals and gain greater financial confidence. We take the time to understand where you want to go, then develop a personalized plan to help you get there.
Schedule an introductory call to see if the Team Hewins approach to financial planning is right for you.
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