Investment News: March 2023

I want to focus on a topic that’s not only timely but also essential for long-term financial health. Whether you’re already retired, approaching retirement, or simply looking to strengthen your financial foundation, staying informed about your personal financial situation is crucial. Recent economic events, such as bank failures and government bailouts, have underscored the importance of having a solid understanding of your financial picture.

While I encourage you to stay informed on these broader market trends, today’s newsletter is all about something closer to home—your day-to-day expenses and how they affect your long-term financial security.

The Importance of Tracking Expenses

One of the most beneficial habits you can develop as part of your financial health routine is regularly tracking your expenses. It’s not about creating a strict budget, but rather about increasing awareness of where your money goes. Think of it as taking your financial pulse: when life is stable, it’s just “good to know” information, but during times of change, it becomes a “need to know” topic.

While some of you may track your expenses on a weekly or monthly basis, others may only do this once a year—if at all. If you’ve been maintaining this habit, it will serve you well in times of transition, such as retirement or the loss of a spouse. But if you haven’t, it’s never too late to start. By keeping a close eye on your spending, you can make informed decisions about your future and avoid financial surprises.

Life Changes and Financial Preparedness

Financial stability is often taken for granted when everything is going smoothly—when employment is secure, health is good, and family life is stable. However, as life changes, whether through retirement, the loss of a spouse, or a significant shift in lifestyle, the importance of understanding your financial situation cannot be overstated.

In recent months, I’ve worked with several clients who have faced the sudden loss of a spouse. This is one of the most challenging life events anyone can experience, and the financial implications are significant. If the surviving spouse wasn’t involved in managing the household finances, the situation can quickly become overwhelming. This is why it’s critical to have an understanding of your day-to-day expenses well in advance of such events. Not knowing your financial baseline can add unnecessary stress during an already difficult time.

Financial Planning for Retirement and Major Life Transitions

Part of my role as a Certified Financial Planner is to guide you through the retirement planning process. One of the key steps in this process is completing an expense sheet. This is more than just a formality—it serves as a baseline for assessing your financial needs in retirement and can help you prepare for hypothetical changes in your life.

For example, we can use this information to run “what-if” scenarios. What happens if one spouse retires earlier than expected? How would your financial situation change if you moved to a new location or decided to purchase a second home? What if, unfortunately, a spouse passes away? By knowing your baseline expenses, we can input different variables and see how those life changes would impact your financial security.

Sometimes, these hypothetical scenarios show that everything will be fine. Other times, they highlight potential issues that need to be addressed before they become crises. If the numbers don’t work, we can start planning for solutions—whether that’s adjusting your spending, reconsidering your investment strategy, or reevaluating your long-term goals.

Why You Should Regularly Update Your Financial Information

If you haven’t been tracking your expenses regularly, making these projections can feel like a monumental task. This is especially true if you’re dealing with a major life event, such as the death of a spouse or an unexpected retirement. By keeping your financial information updated annually, you can prevent future stress and ensure that you’re prepared for whatever life throws your way.

Even if life feels stable now, take the time to review your spending and create a detailed record of your finances. This will not only help you in the short term but will also serve as an invaluable resource during times of transition. If you notice any red flags, we can work together to address them proactively, rather than waiting until you’re in a crisis.

Proactive Financial Management is Key

At its core, financial planning isn’t just about investments or savings strategies—it’s about being prepared for both the expected and the unexpected. By maintaining a clear understanding of your financial picture, you’re not only setting yourself up for a comfortable retirement but also protecting yourself and your loved ones from unnecessary stress during challenging times.

So, I encourage you to take a moment and assess your current financial situation. How well do you know your monthly and yearly expenses? If you’re unsure, start small—track your spending for a month and see where your money is going. The more you know about your own finances, the more confident you’ll feel about your future.

In conclusion, whether you’re planning for retirement, dealing with a recent life change, or simply trying to stay informed, taking control of your financial situation is one of the best things you can do for yourself. If you need help getting started or updating your financial plan, don’t hesitate to reach out. Together, we can create a roadmap that ensures your financial well-being for years to come.

Take care, and remember—staying financially informed today means being financially secure tomorrow.