Making good choices about saving and spending can be difficult, especially when you’re young and relatively inexperienced with finances. Research shows that costs such as housing and student debt can greatly hinder a person’s ability to save adequately for their future. But not all is lost. As the holidays approach, we are reminded of Charles Dickens’ classic novel, “A Christmas Carol,” in which the ghosts of Christmas past, present and future help Ebenezer Scrooge embrace the joy of helping his fellow man after decades of mean-spirited behavior. Similarly, by taking a look at your past money mistakes and current financial profile, you can better assess what your fiscal future will look like. Even if you didn’t start saving early for retirement and made a few wrong turns with your money over the years, you can start making intelligent choices now to create financial stability.
Ghost of your financial past: money mistakes made when you were young. During their 20s and 30s, many people don’t think enough about how much they spend in relation to how much they actually make, which can lead to high-interest credit card debt. Perhaps this was you and it impacted your ability to save for the future. Another financial ball and chain from the past can be student debt. Maybe you got into that “dream school,” but didn’t give any thought to how expensive that education would be and now you have a large mountain of student debt. These are just two of the factors that impact what could be the biggest ghost of your financial past – not saving early enough. A recent study shows the earlier Americans save, the better off they will be as they near retirement, and the more secure they will feel in their old age.
Ghost of your financial present: not having a financial plan. If you haven’t already, now is the time to start working with a financial advisor to devise a financial plan that helps you pay off debt accumulated during your youth and save for the future. If you’ve racked up debt and neglected your retirement savings, it isn’t too late to solve your financial problems, but you need a plan that addresses one problem at a time. Having a formal plan in place can help you be disciplined about creating a budget, controlling your spending and paying off obligations.
You also need a plan to help ensure a secure retirement. If you haven’t put adequate effort into saving, be sure to utilize employer-sponsored 401(k) plans and take advantage of company matches. An advisor can also help provide insight in determining an appropriate investment allocation and develop a plan for the financial hurdles you need to overcome. While it is ideal to start saving and investing as early as possible, middle age is not too late to start making sound financial decisions.
Ghost of your financial future: no financial independence. As you approach retirement, ask yourself: “Do I have financial freedom?” If you did not learn from the ghosts of your financial past and present, then your golden years may not look as bright as you would like. If you did not take steps to correct early investing and savings mistakes, you likely do not have a solid foundation for retirement.
One of the most important components of financial independence is following a financial plan. This plan must include living expenses and health care costs, as these will be financial non-negotiables. Once you’ve accounted for those considerations, you can work in wishes: things like travel, philanthropy and home improvements. As you strive for financial independence, look at what you would like to do with your life and your money, and work closely with an advisor — after all, a good advisor should be able to provide wise counsel on both. As retirement nears, investments typically need to be adjusted from growth management to risk management. An advisor can analyze options to help protect your financial hard work against higher cost of living expenses such as health care costs and unexpected market swings.
Lessons from your ghosts: start now to create financial stability. Don’t let the ghosts of your financial past haunt your financial future. By taking initiative today to correct early mistakes and work with a financial advisor, you can create a blueprint that can help lead to financial stability for retirement. Are you ready to make changes in your financial habits and begin planning for your golden years? The advisors at Girard, a Univest Wealth Division, are available to help. Contact us to have a conversation.
This article is for general informational purposes only and is not intended to provide legal, tax, accounting or financial advice. The information in this article, and any opinions expressed therein, do not constitute a recommendation or an offer to buy or sell any security or financial instrument. Viewers should consult with their financial and/or legal professionals before making any financial decisions.
Girard is a marketing name used by Univest Financial Corporation to provide (1) investment and wealth management, fiduciary services and trust services through its subsidiary Univest Bank and Trust Co., (2) specific fiduciary and investment advisory services through Girard Advisory Services, LLC (3) securities products, insurance products and brokerage services through Girard Investment Services, LLC, a registered broker-dealer and member of FINRA and SIPC, and a licensed insurance agency, and (4) investment management and related products and services for Pennsylvania municipal entities through Girard Pension Services, LLC. Investment products and services are not FDIC insured, not a bank deposit, not bank guaranteed, not insured by any federal government agency and are subject to risks, including possible loss of any principal amount invested.