When learning and honing a new skill, having the right coach makes all the difference. For example, maybe your kids have a hockey coach or math tutor to help them learn specialized skills; or maybe you have a personal trainer or dietitian to help you reach specific health goals. No matter what they are, achieving your goals can be difficult, and we all need assistance navigating certain aspects of our life. A good coach provides invaluable guidance, expertise, and motivation, pushing you to surpass your limitations and reach new heights. That’s why we believe having a financial advisor is so important for hitting your financial goals and maintaining an organized financial house.
If you’ve set your sights on specific savings goals for the year 2024 but find yourself unsure of where to start, let’s delve into the basic steps that are part of our coaching program, designed to keep our clients on the path to financial success.
Step One: Maximize your Employer’s 401k Match
If your employer offers a 401k match, you should be contributing, at minimum, enough to hit that matching percentage. This is essentially free money that you would otherwise be leaving on the table. By contributing at least the amount required to match your employer’s contribution, you’re ensuring you make the most of this valuable retirement plan benefit. Every business has their own plan in place with varying rules and options, so it is important to learn about and understand the one your employer offers.
Step Two: Build an Emergency Fund
An emergency fund acts as a financial safety net providing a sense of security and stability in the face of unexpected challenges. Life is unpredictable, and unforeseen circumstances such as medical bills, unplanned unemployment, or sudden car repairs can easily throw you off balance. A properly funded emergency fund serves as a buffer, allowing you to navigate these uncertainties without compromising your long-term financial goals. The general rule of thumb is
to save 3 to 6 months’ worth of expenses, depending on your life stage and the availability of other savings funds. This fund provides peace of mind and financial stability during unforeseen circumstances.
Step Three: Pay Off Debts
Debt repayment can be overwhelming, especially when faced with various types of debts like credit cards, car payments, and student loans. Prioritize paying off debts with the highest interest rates while continuing to make minimum payments on others. This strategy minimizes the overall interest paid and accelerates your journey to debt freedom.
Step Four: Consider an IRA (Individual Retirement Account)
In addition to your employer-sponsored retirement account, consider opening an IRA – either ROTH or Traditional. The tax advantages and flexibility offered by an IRA allows you to contribute either pre-tax or post-tax, therefore allowing your retirement savings to grow on a tax-deferred or tax-free basis. With more investment options and potential tax savings, an IRA can enhance your retirement savings allowing you to have more money to enjoy in your golden years.
Note that it is important to understand the rules and tax liability linked to both types of IRAs (Roth vs Traditional) BEFORE contributing to avoid unnecessary tax liability and penalties. A financial advisor can walk you through which option may be best suited depending on your overall financial picture.
Step Five: Create Saving Buckets for Other Goals
Beyond retirement, it is important to designate savings accounts or “buckets” for other specific goals. For instance, a 529 plan can be established for your child’s education and a slush fund savings account can be created for leisure activities, self-care days, or unexpected indulgences. While setting aside funds for future goals is essential, the journey to financial success shouldn’t come at the cost of enjoying life in the present moment. Remember that you should not only save for the future but have a plan to enjoy the present.
Working with a financial coach adds an extra layer of accountability to your financial journey. We want to be there so you can easily take care of your family’s short-term and long-term needs. At ARK Financial Wellness, we use a cash flow and savings bucket spreadsheet to help our clients keep everything organized and easy to read. This document helps us track your spending and saving habits so we can adjust your money mindset to better align with your overarching goals.
The path to financial wellness involves a strategic approach and the guidance of a trusted coach. By following these steps, we hope that you can set yourself on the right track to achieving your 2024 savings goals and building a secure financial future.
For a complimentary copy of our cash flow and savings bucket sheet to help turn your money goals from a wish into a plan, please email us at Lisa@ARKFinancialWellness.com.
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The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.
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ARK Financial Wellness, LLC is an independent firm with advisory services offered through Blackridge Asset Management, LLC, a Registered Investment Adviser. Blackridge Asset Management is an SEC Registered Investment Advisory Firm.