To live a long life, you’ll need a healthy supply of money to go the distance with you. The risk of outliving your money is called “longevity risk.” Begin early and follow the following good financial habits, and you’ll increase the likelihood that your money will last as long as you will.
1. Set clear short-term and long-term goals. And create a financial plan to pursue each goal. The plan needn’t be long or formal, just a written plan of action. Try to stick with the plan, even though the market sometimes provides a rocky ride.
2. Eliminate debt. Maintain a healthy balance sheet and a clean bill of financial health. If you accumulate debt, especially high-interest rate credit card debt, pay it off as soon as you can.
3. Live within your means. Pay off all monthly bills. Don’t overspend. One healthy way is to track all your spending for a month, evaluate which expenses are truly necessary and then cut out needless spending.
4. Save diligently, invest wisely. Start saving early and keep putting time and the power of compounding on your side as you build long-term financial strength. Understand that longevity risk and inflation risk (having your purchasing power erode over time) are bigger threats to your long-term well-being than short-term market movements.
5. Pay yourself first. Make it your top priority to save for the future throughout your working years.
6. Monitor your asset allocation. Set and maintain an appropriate mix of investments throughout your life. Your needs, goals and risk tolerance may shift gradually as you age, but you may benefit from broad diversification.1
7. Conduct an annual financial check-up. Review your overall financial well-being, with a particular focus on your investments. Evaluate how well they perform compared with similar investments. And review your asset allocation, rebalancing it as needed.2
8. Protect your family in case anything happens to you. This includes life, health and disability insurance, as well as keeping a will up to date.
1 There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
2 Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principal. No strategy assures success or protects against loss.
Financial planning offered through Northeast Planning Associates, Inc. (NPA), a Registered Investment Adviser. Securities and advisory services offered through LPL Financial, a Registered Investment Adviser and member FINRA/SIPC. Insurance products offered through NPA, LPL Financial or its licensed affiliates. The Credit Union, NPA and LPL Financial are not affiliated. The financial professionals associated with this site may only discuss or transact securities business with residents of the following states: AZ, FL, MA, ME, NC, NH, NV, OK, SC, and VT.
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