Paying close attention to our financial well-being

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January is Financial Wellness Month and local financial professional Barry Bigelow from Great Waters Financial shares tips for achieving money wellness and the pitfalls to avoid.

The first tip is to invest in yourself. Bigelow says it seems so simple but many people neglect to give themselves and their finances the proper care and attention. To improve your financial well-being, he says to make sure you are contributing to your retirement accounts. Your future self will thank you for it. Bigelow suggests contributing 10-15% of your income to a 401(k), Roth IRA or other retirement accounts. At a minimum, contribute enough to get your employer’s match on employer-sponsored retirement plans. He says the IRS has increased the amount individuals can contribute. If you have the ability, the maximum contribution has increased to $20,500 for the year. You can also contribute up to $6,000 into an IRA or Roth IRA. If you are age 50 or older, catch-up contributions allow you to save an additional $6,500 to your 401(k) and an additional $1,000 to your IRA or Roth IRA.

The second tip is to set attainable goals. Bigelow says setting goals that are measurable and attainable is an important piece of any life change you want to make. There are three types of goals to help you with this.

  • Short-term goals: These are things a year or two out like an overseas family vacation! Short-term goals are great momentum builders and can inspire you to keep going.
  • Mid-term goals: While these goals may take 8 – 10 years to accomplish, the outcome will have a lasting impact like remodeling your home. These goals show you it’s possible to save for something with a greater value than the price tag associated with it.
  • Long-term goals: Goals like these require a lot of patience and planning and usually revolve around the retirement lifestyle you want to lead. Waiting 20 or more years for the payoff of long-term goals may feel impossible now, but they are meant to push you.

Next tip is to build a team. Bigelow says having an accountability partner will help you stick to and achieve your financial wellness goals. Sharing your money-related goals with a friend, spouse or family member can help you stay the course. He says if you’re struggling to stay focused on your goals, a financial professional will be able to take a fresh look at your finances and create a tailored plan for your needs.

Here’s some things that Bigelow says can disrupt our wellness journey.

  • Unexpected Expenses
    • Emergencies can often derail any major financial progress we’re making.
    • Ideally, you want 3-6 months’ worth of expenses set aside for an unexpected job loss or untimely expenses.
    • If you don’t have an emergency fund, start by putting away $10, $50 or $100 a month in a separate savings account.
    • Remember, if you use part of your emergency fund, you’ll need to replace it. If your monthly expenses increase, you’ll also want to increase the amount saved in your emergency fund to cover the increase.
  • Market Volatility
    • Emotions commonly drive investors’ decisions. When the market drops, we get nervous. But when it soars, we’re ready to invest even more. That can lead us to sell when stock prices are low and buy when prices go back up, and that’s the opposite of what you want to do.
    • During the Great Recession, people who stayed with a long-term plan and continued to save are much better off today than those who reacted out of fear.
    • If your investments are exceeding your expectations, it’s still a good idea to resist the urge to cut back. The market will always ebb and flow, and you will have an easier time dealing with the fallout of a market crash if you stay the course.