In my experience, financial peace is not so much a destination as it is a journey. As we grow and life brings us challenges, the way in which we find financial peace may change. A few practical steps can help us achieve greater peace, no matter where we are in life. When I feel like my financial life has been on cruise control for a little too long, I use these five simple ideas to fine tune it and bring it back into alignment.
- Review your spending trends. It is easy for our spending to get out of hand when we are experiencing increased stress. Take a look through your spending account and review your purchases over the last 3 months. What trends do you see? Do you see services you are paying for that you are no longer using? Online subscriptions, book clubs, gym memberships? Automatic payments can easily slip through your account without you noticing, often adding up to a large amount of money.
- Review your savings account. If you had an emergency, could the money in your savings account cover it? A good rule of thumb is to have 3-6 months’ worth of living expenses in an emergency account you can access easily. If you don’t have a saving account, start one with a monthly deposit. Treat this deposit as if it were a bill that you had to pay each month, automating the withdrawal from your spending account. This concept known as “pay yourself first” prioritizes saving before spending.
- Review your investment and 401K statements. Learn about the investments that are in your account and find out why you own them. Don’t be afraid to ask questions of your financial advisor or your 401K administrator.
- Review your estate plan. Do you have the documents in place to carry out your wishes if you were incapacitated or to pass away? An attorney can help you draft documents such as a Last Will & Testament, Power of Attorney, Healthcare Power of Attorney, Healthcare Directive, and others according to your specific needs.
- Start educating yourself on financial topics that are relevant to you. You don’t have to be a financial expert to find financial peace. Start with what you know and build on that knowledge. Seek out information from trusted financial professionals who are willing to teach you. If you have been intimidated by financial conversations in the past, start with one or two ideas (such as the ones mentioned above.) Take your time and be graceful to yourself.
While these ideas do not fully encompass your financial life, it is a good place to start if you are not feeling peaceful in this area. You may have other concerns that need specific attention. At any time, please feel free to share your thoughts, comments, or questions. You can contact me directly at [email protected].
