The hot and happy-go-lucky days of summer are beginning to fade into fall. Autumn is another beautiful season as the kids head back to school and families fall back into their blissful routines. The air will begin to cool down and the rush of holiday season is right around the corner. This is usually a perfect time for families to take stock on their financials.
As our families settle into routines and we get back to school and to business, a bit of financial organizing and housekeeping can make it clear where we stand, and how are we (hopefully) progressing toward our goals.
Here are a few pointers to help you develop a comfortable rhythm of routinely reviewing your finances with the goal of growing your net worth:
- Just Do it! Whether one admits it or not, uncertainties, especially in the finance area, brings stress and anxieties into our lives. It is easy to push off tasks that can make one uncomfortable, but in the long run, it’s always better to know where you stand, and where you are headed.
- Start with figuring out your net worth. If you haven’t done this, here are some tips – start by taking stock in what you have at the moment – house you own, savings in your bank, retirement, and investment accounts – these are your assets. On the other end, you need to tally up your debt as well – mortgage balance, car loan, credit card debt, etc. Subtracting your debt obligations from your assets, and that is your net worth. No matter how good or bad it may be, net worth is a good number to know and keep track of.
- Set a goal. We all want to be richer someday. That means we all need to grow our net worth. Set milestone goals can be a great way to motivate you to do that. Start with something attainable, such as getting out of debt (having a positive net worth), or reaching $100K, even $1 million, by a certain age.
- Work on your cash flow and save money. Just having a goal is not enough, the next step is to move toward that goal. The source of growing one’s net worth starts with a positive cash flow – which means you need to make more money than you spend, and save that surplus. Making savings a priority is the key in growing your net worth and feel good about your financial future.
- Invest for the long run, with a properly diversified portfolio. Inflation as we all have experienced in the recent years taught us that putting cash under our mattresses is a sure way to lose purchasing powers over time. And despite the risks involved, investing in the market (stock or housing, etc.) can be a great way to beat inflation over the long run. Though how to reduce your risk exposure while trying to get higher return is not an easy task for most people, though it helps in growing one’s net worth overtime.
- Seek help where you need it. Whether it is a wise family member or friend, or a CERTIFIED FINANCIAL PLANNER® professional, help is available to those who ask. Don’t listen to those who are broke to tell you what to buy and where to invest. Seek out professional help as this is your future on the line. An advisor not only helps you with financial planning and investing, they could also be a partner who keeps you to stay on track toward your goals.
Overwhelmed? Talk to a qualified professional to find out what your options might be and how to be more effective in building wealth while raising a family. Please feel free to reach out to me if you have any questions: li.tian@lpl.com
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. Li Tian, Ph.D., CFP® and LPL Financial do not provide tax or legal advice or services. Please consult your tax or legal advisor regarding your specific situation.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. CFP Board owns the marks CFP® and CERTIFIED FINANCIAL PLANNER® in the U.S.
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