It is never too early to prepare for the future. And one of the most substantial stressors in planning for the future is money. This process can feel overwhelming, but it has never been more accessible to make long-term goals and stick to them.
Olivia Partin, a financial planner from the Diesslin Group, Inc., spends nearly every day with people, young and old, helping them reach their financial goals. Over her years of experience, Partin has honed in on four distinctive components of financial wellness and how everyone can achieve the portfolio of their dreams.
"When it comes to financial wellness," explains Partin, "we discuss four main building blocks with our clients: estate, savings and investments, debt, and protection and insurance." Each one is broken down into detail below.
Estate
One of the first questions Partin asks prospective clients is if they have an estate plan. It is a natural reaction to want to avoid postmortem planning, but having a solid estate plan is crucial to overall financial wellness. Having a Last Will and Testament, as well as ancillary documents (durable power of attorney, medical power of attorney, etc.) are the main components of a well-established estate plan.
"We have had numerous clients mention that the greatest gift their parents have given them is the tools and planning to settle their estate," says Partin.
Protection and Insurance
Protecting the assets a person has worked so hard to preserve is a substantial element of financial wellness. Adequate insurance coverage protects a family from unexpected emergencies or losses due to events outside of their control. "We recommend checking your coverages (property and casualty, auto, and health) annually to ensure you have enough coverage," says Partin. "And make sure you are not overpaying for that coverage."
Savings and Investments
"Given the state of the markets this year, many clients are asking us where they should invest extra cash or proceeds from asset sales," explains Partin. And unfortunately, the only safe answer is to park it in money market funds or short-term US Treasurys, but this is not a long-term solution. But she offers an alternative option, with a potentially higher return: pay off your debt.
Debt
In this economic environment, paying off debt associated with credit cards can be a win-win situation. Consider the interest rate being paid as the return on investment. And reducing or eliminating debt can provide better financial and mental wellness. Using a snowball method to pay off debt can be both satisfying and motivating. "Removing debt from the financial picture not only relieves stress and worry," says Partin, "but it also sets you up to have more funds available to invest in yourself or the market when the outlook eventually improves."
Article by Hannah Barricks
Originally published in West Fort Worth Lifestyle