Financial Focus: How Can You Improve Your Financial Health?
It is always a good idea to stay in good physical shape at all times of your life. But financial health is also important. Are you doing all you can to improve your financial well-being?
The subject of financial health is certainly on the minds of many people. In fact, 70% of Americans say the COVID-19 pandemic has caused them to pay more attention to their long-term finances, according to a recent Edward Jones / Age Wave poll titled “Four Pillars of the New Retirement: What a Difference a The year made.
While interest in financial health is widespread, some groups feel more positive than others about their future. According to the Four Pillars study, baby boomers went through the pandemic in generally good financial condition, while Gen Z and Millennials felt the greatest negative financial impact. And women’s confidence in their retirement savings remains low as the pandemic has widened the economic gender gap, especially for women of color. So, your outlook may depend somewhat on your demographics.
But regardless of your age or gender, there are some steps you can still take to improve your financial health, including:
Carry out an investment report
A regular check-up is a key part of maintaining good physical health. And the same principle applies to your investments: you should periodically assess their “vital signs”. Is your portfolio still suited to your risk tolerance and time horizon? Does it give you the growth potential you need to help you reach your long-term goals, like a comfortable retirement? Is it sufficiently diversified or do you have too many of the same investments? While diversification cannot guarantee profits or protect against all losses, it can help reduce the impact of financial market volatility on your portfolio.
Take preventive measures
Throughout your life, you likely take medications as needed, and possibly vitamins and other supplements, with the goal of treating existing illnesses or preventing future illnesses. You can and should take preventative measures to improve your financial health as well. For example, do you have enough life and disability insurance? If your marital status has changed as a result of divorce, remarriage or the birth of new children, have you updated the beneficiary designations on your insurance policies? And have you taken steps to protect your financial independence – and perhaps avoid overburdening your family – by dealing with the potentially huge costs of long-term care, like an extended stay in a nursing home?
Avoid unhealthy movements
Smoking, a sedentary lifestyle, and excessive stress are all considered unhealthy for our bodies. But some activities are also unhealthy for our financial health. You might be tempted to dip into your IRA or 401 (k) to pay for a short-term need, like a down payment on a new car, but if it’s not absolutely essential that you buy that car, or if you may possibly obtain other sources of funding, you may want to avoid touching your retirement accounts. On the one hand, withdrawals can result in taxes and penalties, but, just as important, these accounts are meant to provide you with some of the income you will need when you retire. pressure you may experience during retirement.
Staying in good physical shape takes determination and work, and so does maintaining financial health. But the effort you put into staying in good financial health can help you progress toward your financial goals.
This article was written for the financial advisors of Edward Jones. Edward Jones and his associates and financial advisers do not provide tax or legal advice. Chuck Smallwood, Bret Hooper, Tina DeWitt, Kevin Brubeck, Charlie Wick and Jeremy Lepore are financial advisors at Edward Jones Investments and can be reached at Edwards at 970-926-1728, at Eagle at 970-328-0361, 970-328 – 0639 or 970-328-4959 and in Avon at 970-688-5420.