FINANCIAL SENSE
How to take care of your
FINANCIAL HEALTH written by JACOB W. BARR ARK FINANCIAL ADVISORS RAYMOND JAMES FINANCIAL SERVICES INC. MEMBER As summer arrives, so do good weather and increased activity. The seasonal shift often causes people to consider their physical health and wellness, and ways they can be improved. But many people overlook an equally important part of their lives: their financial health. Financial health is the state of an individual’s monetary affairs. There are many aspects to one’s financial health, and there is no one right way to evaluate it. However, there are six helpful things that anyone can do to perform a financial checkup. Know your numbers One of the first things you can do is know your numbers. Money comes in and goes out, but there is more to it. Knowing net worth – assets minus liabilities – lets us know if we are operating in the positive or negative. It is normal for that number to fluctuate as life goes on, and you can monitor progress. Equally important is developing a budget, which allows you to plan ahead and know exactly what your fixed expenses are, what money will be left over and if you are overspending. Manage lifestyle inflation As we advance in our careers and start to make more money, spending tends to increase. That is called lifestyle inflation. While you might still be able to pay expenses, lifestyle inflation can limit the ability to build wealth and save for retirement. As time goes by, one’s spending naturally will increase, due to changing circumstances. The key is managing those increases. Recognize needs versus wants Learn to recognize needs versus wants and spend mindfully. There are basic needs that must be managed, such as food, shelter, health care, clothing and transportation. Our wants are not necessary for our survival. Sometimes the lines can be blurred. It is important to make sure needs are a budget priority. Only after our needs are met should we allocate to discretionary spending. Saving It’s never too late to start saving, but the earlier you start, the
better off you will be in the retirement years. The money saved in retirement accounts grows interest. The more time we allow that money to compound, the larger the growth is likely to be. Build, maintain an emergency fund Build and maintain an emergency fund. The general rule for that is to save three to six months’ worth of living expenses, though setting aside money to last six months or more is increasingly being recommended. The truth is, whatever number makes you most comfortable is suitable. These numbers simply serve as a general guideline. Review retirement, investment accounts The final tip for checking up on your financial health is to do a comprehensive and detailed review of retirement and investment accounts. As market and economic environments change, it is crucial to make sure your portfolio is allocated properly and in line with your goals, objectives and risk tolerance. Assuring that your portfolio is in line with your investment strategy helps you stay on track for retirement. Taking care of our financial health and wellness is just as important as taking care of our physical health and wellness. There is no one-size-fits-all approach, but these tips provide a good start for performing a financial checkup. The information contained in this report does not purport to be a complete description of the securities, markets or developments referred to in this material nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Barr and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk, and you might incur a profit or loss, regardless of strategy selected. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. Securities offered through Raymond James Financial Services Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors Inc. Ark Financial Advisors is not a registered broker/dealer and is independent of Raymond James Financial Services.
