Wendolyn Forbes
When it comes to achieving your financial goals, imagine you are looking at a gameboard and, from the start position, you SEE three paths. SEE is an acronym that represents these three paths.
Save more and spend less. Is more money going out rather than into your accounts? Examine your spending habits. Look at your essential expenses (i.e., rent, food, utilities, etc.) and compare those with the non-essential expenses: how and where can you save more and spend less? Do you have enough saved to cover three to six months of expenses? Aim for that goal, which is your emergency savings. Keep your funds in a readily accessible savings account, in the event of an emergency.
Earn more money on your money. If you feel comfortable with your saving and spending habits and your emergency savings account is all set, you may want to know how you can earn more money on the additional savings you are accumulating. A variety of options are available depending on the amount you have, the length of time you have between now and when you’ll need the money, and your comfort level with risk. It is important for you to understand the requirements and risks of each option.
For example, you may consider depositing your money into a Certificate of Deposit (CD) with a financial institution. The benefit to you is that the financial institution pays you (in the form of an Annual Percentage Yield, or APY) to leave your money deposited until the end of the term (a period of months or years). However, if you choose to withdraw your money prior to the end of the term, you may forfeit the interest earned and you may pay a penalty. Another risk is that a better interest rate may become available while your money is committed to a CD, and you will be unable to take advantage of the better rate. Carefully weigh your options and choose one that works for you.
Earn more money through your career. What opportunities are available to you for career advancement? Talk with your employer about what you need to do to advance your career. What additional skills you can learn to enhance your value and increase your earning power?
When considering your financial situation, where do you SEE yourself? You may choose to take one path at any given time. Which one will you choose?
Wendolyn Forbes is a CERTIFIED FINANCIAL PLANNER™ with Wealth Transition Finance, A Member of Advisory Services Network, LLC, where she offers financial planning and investment management services for either a one-time or on-going cost. For more information about Wendolyn’s financial services practice, visit her website at www.wtf-asn.com.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
Originally published in Positively Haywood, October 2022