I know what you’re thinking; what’s a finance toolkit? How do I go about making sure I have what I need? Before going on the deep end, think about it in very basic terms. A toolkit is something full of different gadgets to help you fix, mend or repair things – and tools can be added or removed based on need. Since it’s portable, this toolkit can be taken anywhere and is durable enough to withstand various environments. A financial toolkit serves as your source to maintain a steady pulse on your finances while including important information that can assist in proactively solving problems before they occur. If you need to create, revamp or declutter your finance toolkit, keep reading for must-haves in your arsenal.
Dedicate the time to revisit your budget
Most people either live by their budget, don’t even bother to look at it, or update it so much where it’s no longer useful. No matter where you fall, understand that establishing a budget will help you determine what’s working (or not) over time. I know we can pride ourselves on doing things in our head or at a rapid pace – but it’s best to take some time to review the numbers within your budget to verify it makes sense. Life events can cause your budget to fluctuate along with your specific financial goals. Take the initial time to review, make updates as necessary while feeling confident about your initial work. Don’t be afraid to start from scratch! Adopting different budget methods or creating your own mixture can work in your favor. After figuring out what’s suitable for you and your lifestyle, review your budget weekly to make sure everything is on target. Keeping a pulse on your finances is what helps things stay on track versus reactively making last-minute tweaks.
Determine your short and long-term financial goals
Where would you like your finances to lead your life within the next two years or ten years? Try your best to identify no more than three goals short and long-term; respectively. Believe it or not – how you spend/invest/allocate your funds today creates a roadmap for where your finances will be in the future. Establishing healthy habits now and determining your financial areas of growth will ensure your financial goals will be completed. If you’re having a hard time narrowing down your goals, take a look at these questions for reflection:
- How important is financial freedom to you?
- What luxuries would you like to implement into your life?
- Is entrepreneurship in any capacity a goal of yours?
Remember, when one goal is complete you have the flexibility to incorporate something new into your list. Grant yourself grace – any goal(s) you choose to focus on will always take time, dedication, and patience.
Look for ways to diversify your financial portfolio
As it relates to your long-term investments, explore various ways to diversify your existing portfolio. A solid mix of stocks, bonds, ETFs, etc. is a great way to encourage growth while covering all your investing bases. If you’re unsure of how to move forward, consider using the expertise of a financial advisor to help guide you. Feel free to schedule consultations with various firms to get a feel for who best aligns with you and where you’d like to be in the future. If you pride yourself on doing your own research, pick a new topic each week and explore! There are so many free resources available that can help you before soliciting the help of a professional. If you’re ready to dive into real estate, carve out some time to educate yourself on the basics. If stock market jargon sounds oddly interesting, begin exploring the best way to dive in. Most employers offer a retirement plan and if this applies to you – does your portfolio mix meet your current needs? Are there things you would like to change based on your findings? Leave no stone unturned – be sure you’re completely comfortable with the method(s) in which your money grows!
Review or establish estate planning
While none of us want to blatantly talk about death, it’s vital to make sure there’s a plan in place for your money when you’re no longer here. No matter your marital status or if you have children, it’s always best to have all of your affairs in place. Have you set up beneficiaries? Do you have a will in place? Do you have life insurance policies? Take the time to ensure all of this information is up-to-date and accurate.
Locate all important documentation
We live in a digital world and a lot of us have important documents saved on computers or external hard drives. While there’s nothing wrong with this approach, what happens if the computer files become corrupted or if the laptop no longer functions properly? Be sure to have important documentation in multiple places. A fireproof lockbox or a secure lockbox located at a bank for all pertinent paperwork is ideal. Make sure there are a couple of trusted individuals within your family that know exactly how to get access in the instance of an emergency.
Remain diligent and stay committed
We’ve been through this rollercoaster before. Things start out fantastic and suddenly – life happens. Your spending habits slowly creep back up. You’re making more visits to the savings account. The credit card balance started off very low and manageable, then it gets right back where you started. No matter what missteps happen, try your best to avoid the dangerous cycle of financial carelessness. When challenges arise, take a moment to reflect on where you currently are and all of the work you’re doing to create a better financial future. Stay committed to the process! Financial resiliency is nothing more than being able to overcome what’s thrown your way. We can’t always control what happens in life, but we can make sure there are things in place to avoid the financial roads we’ve worked so hard to escape from.