Investing in your financial health one step at a time

It's 2022, and the pandemic is still part of daily life. It has changed everyone's life in some way and, more specifically, the economic impact of COVID has changed the way many people think about money – how to spend money and how to save it. Were you financially prepared for such a disruption? If you weren't, where are you now in regards to your financial health? Whether you have a financial plan or not, meet yourself where you are and take the next step.

Morgan Stone Padget, a certified financial planner with Robert Gordon & Associates in Springfield, said some people procrastinate when setting financial goals because talking about money can be difficult. She often hears people say that they are not ready to think about retirement or that they don't have enough money to talk to a financial planner. "In most cases," she said, "people do have enough money, and they are ready for that conversation." She said that sometimes people hesitate for so long that it puts them behind, or that can lead to taking no action at all.

Why is it so difficult to talk about money? Money is very personal in our culture, and some see their financial situation as a measure of their success or degree of failure. Whether the feelings associated with money are positive or negative, Joel Gustafson, financial adviser and owner of Momentum Independent Network Securities, encourages clients to keep emotion out of their financial decisions as best they can. He said, "Typically, it's fear and greed that dictate investment decisions, and that's not a good combination." He recommends focusing on two priorities when managing your financial health: Have an investment plan and do not let emotions dictate financial decisions.

How do you accomplish these priorities? Stone Padget suggests you begin by discussing your financial plans with a trusted friend, family member or someone in the financial planning industry. "Whatever your goal, it needs to be an attainable, tangible measure of success," she said.

In other words, don't focus on a vague statement such as: "I want to be financially stable." Unless you know what financial stability looks like, you won't know when you've accomplished it. She suggests breaking it down, for example, "I want three months of expenses in my savings account by June." She said, "Knowing where you are headed starts with having the end in sight."

For some, the next step might be looking further ahead and investing in a retirement portfolio. If that thought is overwhelming because there's so much to consider, rest assured that is perfectly normal. Gustafson said there are multiple variables to consider when planning investments, and it's best to know which are in your control and which are not. He recommends dividing them into two categories: external and internal.

Gustafson said, "We have no control over external variables – the direction of the stock market, interest rates, COVID or political events. We pay attention to these, but ultimately, it's the internal variables that determine our strategy to investment planning, such as career choice, level of income, attitude toward retirement, saving and investing, risk exposure and, of course, needs, wants and goals.

Most important is to understand the power you have to improve or enhance your financial health. Even if you feel confident in your investment portfolio, when was the last time you met with your adviser to revisit your goals and tweak them? According to Gustafson, "Younger investors should take advantage of the stock market volatility and invest more aggressively." Someone who is 30 years old can take on more risk than someone who is 60, so your portfolio should be adjusted accordingly as you age.

"As wealth is accumulated and we age and move into retirement, we may not have four, five or six years to wait for our investments to recover in value," Gustafson noted. "Thus, clients should review and adjust their risk-return criteria regularly." Time is of the essence when creating financial health.

Stone Padget said, "We are all human, and we will inevitably endure challenges and suffer failures, but we should also acknowledge the progress we've made and adjust our goals accordingly."

COVID has been a lesson in how to prepare for the unexpected. Even if you're not where you want to be with your financial health, celebrate progress and don't give up. Take the next step today and imagine where you'll be when 2022 wraps up less than 12 months from now.

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