Recently I have been writing about what I consider to be the 10 most important steps you could take to improve your financial situation. My intention is to allow you to do a self-audit and really think about each step and where you stand. If it is a step you feel you have completed or mastered then it is time to celebrate! If it is a step you feel you can improve upon then I would love to provide information, resources and support to help you do just that.
You can Live Richly℠ now and in the future…. by making smarter financial decisions. To make better decisions, you must have complete information about your financial situation and face the truth. Your financial truth. Don’t sugar coat it but also, don’t be hard on yourself or make it worse than it really is. Sit with a financial professional who can look at your situation rationally, logically, and unemotionally. With honest analysis and deliberate action, you could have the best possible outcomes!
People often ask me, “How much should I allocate towards savings?” The answer is…..it depends. It depends on your age, how much you already have saved, the amount of risk you choose to take at different stages of life, when you wish to buy a home, make other large purchases, or retire, and how much you want to spend during retirement. Luckily, there are Wealth Advisers out there, like me, who could help you create a plan based on your specific needs and desires. To get you started, until you make the time to meet with a licensed advisor, here is a basic answer.
Think of your savings as three separate buckets.
Until you meet with your advisor and set goals specifically for your financial situation you may wish to use the 5/5/10 plan. Put 5% toward the Emergency savings, 5% toward your dream savings, and 10% toward your retirement savings, at a minimum. Once your emergency savings bucket has filled up to a comfortable level you may then allocate that percentage toward your retirement savings. This is similar to the savings plan Fidelity suggested in their March 2019 article.
Then be sure to automate your savings. David Bach, author of “The Automatic Millionaire”, suggests you “Pay yourself first. Automatically. That little decision can change the course of your life.” When you pay yourself first, before your discretionary expenses, your chances of success multiply tremendously! I want to see you reach your goals and have Clarity, Confidence, and Control over your finances.
References and further reading:
Bach, D. (205). The Automatic Millionaire https://davidbach.com/books/
Fidelity Viewpoints. (2019). 50/15/5: a saving and spending rule of thumb from https://www.fidelity.com/viewpoints/personal-finance/spending-and-saving
Investing involves risk, including the possible loss of principal. Investors should consult their financial advisor regarding their individual situation.
United Capital Financial Advisers, LLC d/b/a Goldman Sachs Personal Financial Management (“GS PFM”) is a registered investment adviser and an affiliate of Goldman Sachs & Co. LLC and subsidiary of The Goldman Sachs Group, Inc., a worldwide, full-service investment banking, broker-dealer, asset management, and financial services organization.
The information contained herein is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered investment advice. GS PFM does not provide legal, tax, or accounting advice. Clients should obtain their own independent legal, tax, or accounting advice based on their particular circumstances. Please contact your financial adviser with questions about your specific needs and circumstances.
Information and opinions expressed by individuals other than GS PFM employees do not necessarily reflect the view of GS PFM. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.