Invest Financial Planning

10 Financial Basics You Need Now

Howard Gensler  |  May 21, 2024

No, the rules of investing and saving haven't changed much – but a refresher on financial basics can always be helpful.

The past few years have been uniquely turbulent in the news – we’ve had wars, insane inflation, an economy that doesn’t match the positive headlines coming from the stock market (a vibecession, if you will) and a job market that has left everyone searching just scratching their heads.

But just as good times present investment opportunities, bad times present investment opportunities, too. And the thing that should be top of mind for all of us, no matter what the world is throwing at us, is our goals. 

Find Out What Your Goals Really Are 

When Certified Financial Planner Sanket Khanna of Arya Lane Capital meets with prospective clients, his first move is to get to know their goals. What problems are they trying to solve? Are they looking to fund their children’s education, have a secure retirement, maybe change careers? Understanding his clients is the only way he can devise a plan that fits their needs. And understanding your own needs – where you are in life – is the only way you can create a plan for yourself.

“It’s a lot of different things,” Khanna says. “I really try to understand big pictures. Investments are one piece of the pie. Retirement planning is one piece of the pie. Estate planning is a piece. Tax planning is another and insurance planning is one more. That’s a very holistic take. Where are you with all of those topics? Now let’s put the answers down on paper and try to stress test the odds of you achieving your goals, based on what you told me your assumptions are.”

Budgeting & Investing, No Matter Your Income Level 

Khanna says one of the most important and difficult discussions he has with people pertains to budgeting. Are they living within their means? How much is coming in on a monthly basis? How much is going out? (These important questions are part of the reason why our FinanceFixx budgeting course starts with getting a handle on all things spending!) “You have to understand that,” he says, “because if you live beyond your means, then you’re running a deficit every month.” If you run a deficit, you not only can’t save, you have to borrow, and then when you can save, you first have to pay off your debt.

“For folks who are younger, it’s so important to start investing and saving early,” Khanna says. “That’s so important because a lot of folks don’t understand the power of compounding and growing assets. The more you can save and the more you have in the beginning, the bigger that snowball will grow.” As a general rule of thumb, at a 6% return, your money will double every 12 years. Let’s say you can invest $5,000 when you’re 28 years old. If you can get a 6% return, when you’re 64 years old that $5,000 will be worth $40,000. If you can continue to save $5,000 per year, by the time you retire you’ll have a nice nest egg. And ensuring more women have a nest egg they can rely on is exactly why the HerMoney team launched its InvestingFixx investing club for women. (If you join us now, your first month is free!) 

Maximizing Your Employer-Sponsored Plan 

Khanna adds that if you have a retirement plan through your employer, you should try to maximize your contributions to that plan because it will also reduce your taxable income today. “The more you can put away in a tax-deferred vehicle or tax-free vehicle early on the better,” Khanna says. “It’s going to be there for you at the end of the game.”

As for specific types of investments, Khanna says it depends on your age and your risk tolerance. “A 25-year-old,” he says, “has more time to make up for any losses so they can afford to be a little riskier. Someone who’s approaching retirement age may not have time on their side to make up for any potential losses. It’s very subjective.”

The 10 Financial Basics To Consider  ASAP

No matter where you are in your financial life or your journey in the workforce, there are investment basics that can benefit you at every stage — no matter what’s happening in the headlines that you simply can’t control. Here’s a look at 10 of our favorites. 

  1. Know your family education goals: If you have children or wish to return to school yourself, college and advanced degrees can be expensive. What do your education goals look like for the next couple of decades? If you have them, a 529 plan is a great place to start
  2. Know your assets and liabilities: Understand the value of your property (home, auto), and the mortgage or loans you have on those assets. Can you turn your assets into cash, if needed? What would that plan look like for you? 
  3. Know your budget – income vs. spending: If you’re making $1,200 per week and spending $1,400 per week, you’ll find that plan will leave you in debt very quickly. What can you do to get back on track with your budget and start spending less than you earn — ideally, even saving some of your money each month? 
  4. Know your savings rate: Are you able to put aside money each paycheck for your retirement, a vacation, surprises expenses or a rainy day? We can’t all save thousands when we’re first getting started in the workforce, but anything you can set aside — even $20 here or there — is a great place to start.
  5. Know when you want to retire: Some people truly love their working lives and want to continue working part-time or consulting even into their 70s or 80s. Meanwhile, many of us are more eager to fully retire and put our working years behind us. If you know your assets and liabilities, income vs. spend and savings rate, you should be able to calculate when you’ll be able to retire. No, you don’t have to retire when the numbers say you can, but it’s nice to know.
  6. Know what you want to spend in retirement: In other words, it’s time to get an understanding of what you’d like your lifestyle to be when you retire. Are you going to want to travel the world, or work in your garden and read books from your front porch rocking chair? The amount of money you’ll need to live out your retirement dreams will vary greatly depending on your goals and the area of the country where you want to settle down. Take a look at what you think you’ll need and then put pen to paper to see how long it will take you to get there. 
  7. Know your risk tolerance: If taking a flier on an investment (i.e., making a high-risk investment with your money) is going to keep you up at night, then don’t do it. If you’re close to retirement, putting a chunk of your 401(k)  into a high-risk start-up may not be the best idea. Know your risk tolerance before you invest your money, and we promise you’ll feel more confident in where you’re headed. 
  8. Know your time frame to build a nest egg: Waiting to plan for retirement until your golden years are already visible on your life horizon is like trying to read “War and Peace” a few days before the exam… You can set yourself up for success by starting early and letting compound interest work its magic for you. (And no, it’s never too late to get started, but your journey will be easier and less stressful if you start as soon as you can!) 
  9. Understand the importance of compounding: Money that’s invested well, grows. For example, if you have the ability to put $10,000 into an account for a child at their birth, and you let the money grow at a rate of 6% annually, when that baby turns 60, that $10,000 will be worth around $320,000. That’s just one example of what the power of compounding can do for the money you invest. 
  10. Understand that your investments don’t all have to be home runs: When you’re looking for promising investments, it would be amazing to find that penny stock that jumps to $50/share, but home runs like these are rare. Slow and steady truly does win the race, so look to invest in areas that have a proven growth rate over time, and when you get invested — stay invested. (Even in the face of scary things that we can’t control… especially in the face of scary things we can’t control.)


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