The term “budget” can mean different things to different people. For those who are knowledgeable in finance, it means a carefully crafted tool that can help achieve short- and long-term financial objectives. To the less experienced or disciplined, it’s related to limitation and restriction in spending. Regardless of your financial intelligence, a budget can be established and help during times of economic hardship.
There are several styles of budgets that cater to investors who can’t stick to a traditional budget plan. With two separate checking accounts and a high-yield savings or money market account, investors can set aside savings on a regular basis and automatically funnel income into a long-term savings vehicle. Using the past three months of bank and financial statements to analyze expenses can help investors curb spending. Accountability from a partner in the budgeting process can also provide motivation. If you’re struggling with traditional budgeting, work with your Enso | Sonoma financial advisor to determine which alternative plan works for you.
While Social Security serves as a source of income for millions of current seniors, new data reflects that retirees are losing confidence in the program. This is largely due to the impression that Social Security is close to bankruptcy. Fortunately, that is an unlikely occurrence because the program is funded by payroll taxes. Therefore, as long as we have a workforce that pays taxes, seniors will receive benefits.
Since Social Security is not a program meant to sustain seniors on its own, it’s important that investors establish savings. This can be achieved with a 401(k), IRA, or stock investments. With consistent saving over time, one can accumulate a good amount of wealth. Investors can also get more out of Social Security when strategically claiming their benefits. By waiting until full retirement age, which ranges from 66 to 67 depending year of birth, deductions can be avoided. Work with your Enso | Sonoma financial advisor to establish a savings plan that will add to your comfort as a retiree.
Cash is an important part of any investor’s financial portfolio because it provides liquidity and reduces volatility. While there are various asset allocation models, cash allocations are often 15% or more of some portfolios. When protected by FDIC insurance, cash returns can be considered risk-free and used as a baseline for other investment opportunities.
If you’re earning almost 0% on the cash in your portfolio, you are losing out on easy money and will be inclined to take more risk. Investors can easily earn 1.70% or more from a savings account and 2.20% APY on a 12-month CD. To ensure that you get the best yield on your cash and your deposits are protected by the FDIC, work with your Enso | Sonoma financial advisor. They can advise on interest rates, pricing, and bank promotions that aren’t advertised.
Long-term mortgages can be daunting, but there is a way to save thousands of dollars in loan costs. As long as investors remain disciplined and keep making payments, a bi-weekly mortgage can help them make the calendar work in their favor. With bi-weekly mortgage payments, homeowners make half of their mortgage payments twice monthly, resulting in 26 half-mortgage payments each year.
In comparison to the 24 available bi-monthly pay periods, the 26 bi-weekly periods produce the equivalent of one extra monthly payment each year. This can save homeowners cash and help them pay their loan off ahead of schedule. According to experts, there are significant challenges associated with maximizing the benefits of a bi-weekly mortgage, so be sure to work with your financial advisor.
As investors manage their finances, they should often revisit their approach to ensure that they are making the right decisions. In many cases, there are signs that may warrant a new approach to spending and money management, especially when they have the potential to dig investors into a permanent hole.
If you’re living paycheck to paycheck, not saving for retirement, are unaware of what your credit report holds, you have credit card debt, or don’t have a budget in place, be sure to collaborate with your financial advisor. Their guidance on the path to future wealth can help you adjust your plan in time to make up for any road blocks you may have already experienced.