Building Financial Health: Small Steps for a Big Impact

At Litman Gregory Wealth Management, helping clients build strong financial foundations is at the core of what we do – including supporting those clients at the start of their financial journeys as well as guiding families who want to pass their smart money habits on to heirs.

For all of these goals, what we learn over and over again is that starting early can make all the difference. It can have a powerful impact over time and set one up for lifelong success – and the beginning of the year can be the perfect time to reassess financial health and set new goals together.

Charles Schwab recently published a guide on “New Year’s Financial Resolutions” with a summary of what we believe are impactful steps to help boost financial well-being, some of which are particularly helpful for those seeking to establish or reinforce their financial habits – here are a few we regularly recommend:

1. 𝐂𝐫𝐞𝐚𝐭𝐞 𝐚 𝐁𝐮𝐝𝐠𝐞𝐭: Track your spending for at least 30 days to see where your money is going. Even a simple budget can help you start to prioritize what matters most and begin saving for future goals. If it’s helpful, we have a budgeting spreadsheet that we can share to help you summarize your findings.
2. 𝐒𝐭𝐚𝐫𝐭 𝐒𝐚𝐯𝐢𝐧𝐠 𝐄𝐚𝐫𝐥𝐲: Even small contributions add up over time thanks to the power of compounding. Increase your savings gradually by “giving yourself a raise” when your salary grows. We can help you set regular and automatic savings plans, and help monitor those contributions to your “nest egg.”
3. 𝐌𝐚𝐧𝐚𝐠𝐞 𝐃𝐞𝐛𝐭 𝐖𝐢𝐬𝐞𝐥𝐲: Use debt as a tool, not a burden. Keep total monthly debt payments below 36% of pre-tax income and limit high-interest consumer debt like credit cards where possible. We can also help make sure you are taking debt into consideration in your tax reporting, and look for more cost effective options when needed.
4. 𝐏𝐫𝐞𝐩𝐚𝐫𝐞 𝐟𝐨𝐫 𝐄𝐦𝐞𝐫𝐠𝐞𝐧𝐜𝐢𝐞𝐬: Life happens. An emergency fund with 3-6 months of essential living expenses can help you weather unexpected bumps in the road. We often help clients set up a cash cushion separate from their invested savings, and find ways to help them earn interest on that cash.
5. 𝐈𝐧𝐯𝐞𝐬𝐭 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐅𝐮𝐭𝐮𝐫𝐞: Time is your greatest ally. Even modest investments now can grow substantially over time. Diversifying early and rebalancing as your goals evolve builds lasting stability. In our portfolio management, we make sure to build in diversification that provides some overall risk management, and rebalance to the target allocations on a regular basis.

Financial wellness doesn’t require perfection – in fact, small, consistent steps can lead to big transformations when it comes to financial success. If you’d like to discuss what steps you can take, please reach out to your Advisor to review your situation.

Post authored by Senior Advisor, Monica Muñoz, CFP®

Important Disclosure

The information is this article have been provided by Litman Gregory Wealth Management, LLC (“LGWM”) for general educational informational purposes only. If you would like personalized financial advice, please consult a financial professional or reach out to your LGWM advisor.

Economic and market trends mentioned herein are for context and do not guarantee future performance. No statement herein is to be construed as a solicitation or recommendation to buy or sell a security. The information contained herein has been derived from sources that we believe to be reliable; however, we do not make any representation as to the accuracy, timeliness, suitability, completeness or relevance of any information. Nothing herein should be construed as legal or tax advice, and you should consult with a qualified attorney or tax professional before taking any action. Information presented herein is subject to change without notice.

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