10 Simple Keys to Unlock Financial Security

Smart financial moves are actually much more basic than most people think. Here’s a list of financial keys to live and thrive by.

1. Save Aggressively / Invest Moderately: The earlier you start saving the better, for every year you delay you’ll need to save much more to catch-up. Aim for at least 10% of your gross annual income. Long-term financial success is primarily about being a great saver, and has virtually no connection to being an aggressive investor in the equity markets.

2. Avoid Investment Extremes: Just like life in general—the extremes almost always come at a very high and unfortunate cost. The problem for many investors is that they get caught up in the fear and greed cycles of the market, and succumb to the instant gratification of taking significant action in their portfolio. Moving to almost all conservative or aggressive holdings carries with it a very high likelihood of a costly mistake.

3. Avoid Expensive Investment Products: Expensive financial products and strategies are mostly designed to enrich the people selling them. A transparent portfolio of well diversified and inexpensive indexes/ETF’s has historically and quite consistently outperformed high expense financial products.

4. Know Your Budget and Manage Debt Wisely: Create and periodically review a workable monthly budget, and never accumulate consumption debt. The only areas where debt is a good idea is with a mortgage, a business expansion, or an investment in maintaining/improving your career skills. The popular notion to always be debt free is not correct—there is such a thing as smart debt, and when used correctly it can substantially enhance financial success.

5. Protect Yourself: There’s no more important asset than you. Stay current on issues that affect your career and employment potential, and maintain a healthy lifestyle. Protect what you have with insurance—be sure not to overlook umbrella liability insurance.

6. Enjoy Your Occupation: People who do what they enjoy (or love what they do) tend to do it better, for longer, and are far happier for it. They also tend to generate earned income well into their golden years.

7. Have Mutual Goals: Make sure both you and your significant other are on the same financial page, consistently striving for mutually agreed upon goals. If there’s a struggle to make good financial decisions, the best way to defuse ongoing problems is to openly talk about it with an expert.

8. Have a Financial Life Plan: Everyone recognizes the value of having a better grasp on their financial life, but for most there’s a significant gap between intentions and actions. An organized financial life plan is the vehicle to bridge that gap, and improve your odds of success.

9. Work with a Fiduciary: Thankfully, it’s never been easier to find a fiduciary advisor who’s not selling products, and is required by law to act in your best interest. In this day and age there’s no longer any reason to go it alone. Invest in finding someone good. A certified financial planner (with 10-plus years of experience) that only works as a fiduciary is likely a very good minimum starting point.

10. Have an Estate Plan: Make sure your Will, healthcare directives, and power of attorney are up to date, and that assets will transfer according to your wishes. Be sure to have adequate life insurance (usually term-life) to protect loved ones.

Robert Leahy is the Founder & CEO of Leahy Wealth Management Group. He is a Certified Financial Planner™ (CFP), Accredited Estate Planner (AEP), and Chartered Financial Consultant (ChFC), and specializes in High Net Worth Retirement Planning and Investment Management. http://www.leahywealthmanagement.com