Financial Wellness Checkup

Graduations are here, weather is warming, and invitations to fun events are arriving daily from all arms of your social groups. The final weeks of spring and beginning of summer present endless spending opportunities. As such, we thought it might be helpful to take a couple of minutes to share five smart money moves to help you achieve ongoing financial wellness.

1. Pay Yourself First

This may seem confusing at first glance, but paying yourself is crucial. How do you accomplish it? Consider allotting and routing a percentage of your paychecks into a high-yield savings account or investment account. That way, instead of receiving 100% of your pay into your checking account where you can more easily spend it, a portion has already been set aside as savings. You’d be surprised at how quickly this one step can transform your finances and help visualize how you can best save for priorities.

2. Plan for Taxes

This is a big one for business owners, the self-employed or those enjoying the gig economy. When a self-employed person makes $1.00 pre-tax, they typically net somewhere between $0.70-$0.80. This can vary depending on their tax and entity status, but income tax must be paid. The same logic applies to taxes resulting from capital gains. When an investor sells a capital investment like stock or real estate, taxes are usually the last thing on his, her, or their mind. Usually, there are plans for the proceeds and income in place already but do yourself a favor: account for taxes and pay them in a timely manner. The last thing anybody wants is to owe the heavy penalties that the IRS levies on past due tax.

3. Automate Investment and Expense Payments

Undervalued and infrequently discussed, the simple act of automating both expense and investment payments can contribute to your bottom line over time. First, it frees up your valuable time by completing tasks automatically. Next, it protects people from themselves — and the temptation to overspend before handling expenses and allocating capital for investment. Taking action to automate your investments and expenses can help get your finances running like a well-oiled machine. Automating leaves little room for human error. Discuss an amount that is appropriate with your financial advisor or planner.

4. Check In and Spend Within Your Means

Do you have an awareness of where your spending habits fit within your overall financial picture? Have you checked in with yourself recently to see how you feel when you review your recent purchases? If not, there is a chance you are not spending within your means. Creating a formal financial plan and a budget that encourages paying off debt rather than frivolous spending can be a beneficial and clarifying financial exercise. Accompanied by the three smart money habits above, you can gain confidence in spending within your means. Taking a pause prior to making a purchasing decision can also help gain a better measure of wants versus needs to determine what is a necessity.

5. Net Worth Tracking

A common number that depicts an individual’s overall financial picture is their net worth. Generally speaking, we arrive at this number by deducting all debt from assets. By tracking it periodically, patterns emerge, opening the door for adjustments and optimization. Keeping track of this valuable metric can help you achieve financial goals, however do not forget that this number is relative, and will fluctuate according to where you are in your personal, professional, and financial journey. As with any benchmark, you need to take into consideration the big picture of what is happening in your life if you wish to use it as an effective gauge of success.

We wish you a season of prosperity and please reach out if we can be a part of reaching your financial wellness goals.

The information and analysis expressed herein is for general and educational purposes only. You should make your investment decisions based on your personal financial goals and the reward/risk level with which you feel comfortable.  Investing involves risk, including the potential for loss of principal.  Past performance does not guarantee future results. Please consult Centerpoint Advisors, LLC about your investment needs, investment objectives, risk tolerance and any changes in your life that may impact your financial objectives.