By Chris Heisten, CRPC®, CFP®, CSRIC®
If there’s one thing that’s certain, it’s change. Whether that’s a change in career, a move, or market changes, we all have learned how to live with change because there’s no avoiding it.
With all the recent changes in the world, it can feel like we’re living in uncertain times. If all these ups and downs have made it hard for you to make decisions or plan for the future, you aren’t alone.
As we navigate continually uncertain times, here are 5 money moves you can make to feel a little more prepared for whatever comes next and help build a strong financial foundation.
1. Grow Your Emergency Fund
As the old proverb says: “Prepare the umbrella before it rains.” Building an emergency fund is the same as preparing the umbrella—it is the foundation of financial preparedness. Generally, you should have enough money to cover 3-6 months of basic living expenses (mortgage, utilities, groceries, etc.).
With all stock market uncertainty and recession fears, many experts have suggested maintaining a larger emergency fund closer to 6-12 months of expenses. If you’re single, or your household only has one source of income, consider saving on the higher end of this scale to make sure you’re covered in the event of a job loss or reduction in income.
This money should be held in a highly liquid account so that it is readily available should an emergency occur. Look for an account that offers a competitive interest rate. You worked hard for that money, now put it to work for you.
2. Stick to a Budget
If the emergency fund is the umbrella, then budgeting and tracking expenses are the sturdy rain boots you wear when the storm clouds come rolling in. Tracking spending habits can be difficult, especially in trying times, but thankfully there are several apps that will do it for you.
Once you have a good idea of where you currently spend money, you can begin to build a budget around where you want your money to go. This can be modified as needed as time goes by and life changes so that you are better prepared to withstand potential fluctuations in income.
3. Manage Risk
Risk management is a great way to safeguard what you’ve already built. Unmanaged risk can mean the difference between maintaining an ample emergency fund or not having enough when you need it the most.
Be sure to review your insurance policies, taking care to bring them up to adequate coverage levels. This should include life, health, auto, and homeowners insurance at a minimum, but disability, umbrella liability, and long-term care coverage should be considered as well. These risks are often overlooked and can be devastating to a financial plan. Making sure you are adequately covered now will save you time, money, and energy in the future.
4. Evaluate Your Investment Allocation
Investment allocation and risk tolerance are important factors to consider when assessing financial preparedness. If your investment allocation does not align with your risk tolerance, it can lead to unwise investment decisions.
It’s common for people to feel worried when they see their investment values fall during a financial crisis, but a properly diversified investment allocation specifically tailored to your level of risk tolerance can alleviate quite a bit of the stress surrounding market volatility. This helps to keep you invested through the downturns so that you can benefit from the upswing when the market eventually recovers. In this case, “stay the course” is tried-and-true advice, especially if you have a long time frame before retirement and a sufficient emergency fund to get you through difficult times.
5. Partner With a Financial Advisor
It’s always wise to enlist the help of a professional who can provide objective advice, especially in today’s changing times. Heisten Financial is a boutique financial planning firm with the whole focus of giving clients back their time so they can spend it doing what’s most important to them. Acting as true fiduciaries on your behalf, we focus on solving your financial pain points and problems—no matter what life throws your way.
If you’d like to see how we can help you navigate these uncertain times, schedule a complimentary assessment today!
Chris Heisten is President and Founder of Heisten Financial LLC, a fee based boutique financial planning firm with the focus of giving clients back their time so they can spend it doing what’s most important to them. Acting as a true fiduciary for his clients, Chris aims to solve their financial pain points and move them toward financial freedom. In the financial industry since 2007, Chris partners with business owners and oil workers on their journey through life, striving to instill calmness and a sense of direction as he simplifies the complex. He loves nothing more than seeing clients experience relief when they achieve what they thought was impossible.
Chris graduated from the University of Maine, where he played hockey on a scholarship, and retired from professional hockey in 2007. In the community, he remains engaged serving as a youth hockey coach. Chris holds the CERTIFIED FINANCIAL PLANNER™, Chartered Retirement Planning Counselor℠, and Chartered SRI Counselor™ designations. Outside of the office, he enjoys trying new food and wine, reading, traveling, playing golf and hockey, fat tire biking, and donating to local charities. His passions include being a husband and dad, lake life with the family, watching his son and daughter play sports, and spending time with his wife. To learn more about Chris, connect with him on LinkedIn.