A Message from Fibre Financial Group
The Basics of Financial Fitness
Becoming financially fit requires maintaining foundational elements, including a budget, emergency fund, strong credit score, and retirement savings. There’s a subjective uncertainty associated with financial wellness. Are you financially fit? And if so, how fit are you?
While there is no clearly defined threshold for answering affirmatively, much less grading your level of fitness, there are baseline elements associated with financial fitness. To make sure that you’re on the right track, develop a financial plan that lays out clear goals and timelines. Below are steps to get you started.
As a first step, make a reasonable and practical budget, assessing your income and expenses (by month, if possible), to understand your cash flow and identify areas where you can trim costs. Revisit and revise your budget regularly to make sure it aligns with your personal circumstances.
Save for Unexpected Expenses
Prepare for unexpected expenses, such as a medical emergency or major home repair, by establishing an emergency fund that can pay for these costs. Ideally, you want to keep three to six months’ worth of living expenses in the fund. Without such a backup source of payment, you may have to incur credit card debt, which can be unwise.
Regularly Assess Your Goals
Think about your short-, medium- and long-term goals at least once a year. Do you want to pay off your student debt, buy a new home, or travel during retirement? Do you have enough set aside to pay an upcoming tax bill? Your long-term goals may not change often, but your short-term goals, such as paying bills and reducing debts, may need to be reevaluated several times a year.
Check your credit report periodically to make sure there are no errors, while also using it as a tool to make sure that you’re paying your bills on time and staying within your established credit limits. Such actions will help increase your credit score. Note: You are entitled to a free copy of your credit report annually from the three major credit reporting companies: Experian, Equifax, and TransUnion.
Establish Long-Term Financial Goals
Saving for your retirement is a personal decision that will help shape your lifestyle during your golden years. It’s never too early (or late) to work with a financial professional to strengthen your retirement plan.
Increase Investments Potential Faster with Early Contributions
Investing early and often, such as a small recurring investment over a long period of time, has the potential to produce greater returns than investing a larger amount over a shorter period of time.
For instance, if you invest $75 a month beginning at age 25 and continue until you are 65, your earnings will be greater than the 35-year-old who invested $100 a month until reaching 65, assuming an equal rate of interest for each.
(This is a hypothetical example and is not representative of any specific investment. Your results may vary.)
Review Your Plan
Establishing a financial plan is not a one-and-done proposition. Review your plan at least annually, revising it as necessary to align with your financial goals.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.
*Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risks. Qualified accounts such as 401(k)s and traditional IRAs are accounts funded with tax deductible contributions in which any earnings are tax deferred until withdrawn, usually after retirement age. Unless certain criteria are met, IRS penalties and income taxes may apply on any withdrawals taken prior to age 59½. RMDs (required minimum distributions) must generally be taken by the account holder within the year after turning 70½.
Prior to investing in 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are sui able for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. This material was prepared by LPL Financial, LLC.
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Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Fibre Federal Credit Union and Fibre Financial Group are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Fibre Financial Group and may also be employees of Fibre Federal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Fibre Federal Credit Union or Fibre Financial Group. Securities and insurance offered through LPL or its affiliates are:
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