5 Healthy Money Moves to Make Now (or Anytime)

Key Takeaways

Spring is the season that many think about renewing and refreshing homes and habits. How about doing the same for your finances? Financial consultants Trey Byrd and Duo Tran give their top five tips to help spruce up your financial health now or anytime.

“Practicing good money habits comes naturally for some people,” says Duo. “For others, it takes more effort. However, in the long run, if you commit to healthy money moves, it can help you stay in control of your finances, rather than letting your finances control you.”

Here are Trey and Duo’s financial health tips.

1. Start With a Budget

If you’ve never followed a budget, our consultants say there’s no time like the present. “Knowing how you’re spending your money is foundational for your financial health,” says Trey. “It not only helps you avoid overspending and stay out of debt, but it is also essential for a good investing plan.”

How do you get started? Make it simple and do what works for you. For some, that means taking pen to paper, while others prefer apps or online tools to help manage the budget. Download our budget worksheet  to get a comprehensive list of categories to consider for your spending plan.

Already budgeting? Don’t forget to revisit your spending plan periodically and make sure it still works for you—and that your needs haven’t changed.

2. Build Your Emergency Fund

Nothing can derail finances faster than an emergency if you haven’t saved for the unexpected. It’s a healthy habit to set aside money for roughly three to six months of living expenses.

Duo says, “Having an emergency fund can help keep you from using credit or dipping into investments earmarked for other goals, like retirement.” He suggests starting with small contributions and increasing them as you can.

3. Take Time for a Financial Plan

You likely have specific goals in mind—a new house, a college education and, of course, retirement. That’s a good start, but an actual documented plan can be a roadmap to help you determine the kinds of investments you need and lets you track your progress. Planning on your own? Consider these three things:

• Define your goal. Name it, date it and estimate how much you’ll need. Financial calculators can help you get it right.

• Determine your investing profile. Know how much time you have to invest and how you feel about taking risks with your investments. Taking a risk assessment can help you get a good idea. Both your timeline and risk tolerance can help you choose investments that match you.

• Commit to time-tested practices. These include diversifying your investments by spreading them across several different investment types, choosing an asset allocation (how much of each kind of investment) that fits you, and sticking to your plan, even when markets seem to be doing backflips. These practices can help manage risks to your investments and may give you a better chance of achieving your goals.

Get Help For Your Plan

Another option for a financial plan is to work with a trusted advisor. Rather than figuring out things on your own, an advisor can help you set goals, assess your risk tolerance and help guide you through things you may not have considered. In addition, the advisor can help you match investments based on those factors.

“Ongoing financial planning is just part of the service you receive with our in-depth advisory,” says Duo. “We also help match a professionally managed portfolio to your needs.”

Not ready to go all in with a financial advisor? You have other choices, such as working with a robo-advisor for investment advice.

Another option is to work with a consultant for a financial plan only. “For a competitive fee, you can meet with someone to create your plan,” says Trey. With American Century’s advice services, you can decide how you want to work with our consultants: ongoing and in-depth planning or short term in two to three sessions. Learn more about our advice options.

Revisit Your Plan

Once your plan is in place, you won’t want to forget about it. Our consultants say to review your financial plan periodically to see if it still works for you. Duo says, that answering these questions may help you see if you’re plan is still a good fit:

• Am I still comfortable with the risk in my portfolio?

• Am I on track with my goal?

• Have life events changed my priorities or my timeframe?

• Do I still have the right asset mix for my risk level and timeline?

4. Invest Regularly

Investing on a regular basis not only helps you build a nest egg for the future, but it also has healthy benefits for your finances. Investing a set amount each month can keep you on track, and helps you:

• Avoid guessing about when to invest and instead focus on long-term goals rather than short-term market volatility.

• Ignore market swings and the emotions that come with them. Plus, you will buy more shares when prices are low and fewer shares when prices are high. This is known as dollar-cost averaging.*

• Take advantage of time, which can pay off later. This chart shows how regular investments could potentially add up over 30 years.

5. Restore Your Portfolio by Rebalancing

If you think you need a portfolio change, one way is to rebalance—buying investments you have too little of and/or selling investments you have too much of. The idea is to reset your original stock, bond and cash equivalent target percentages or set a new course if your goals have changed.

It’s good to rebalance, but not all the time. How often you rebalance can depend on market activity that may have given you too much of one kind of asset and not enough of another. It can also depend on whether your goals have changed.

“Reviewing your portfolio periodically can help you decide when it may be the right time to rebalance,” says Trey. You may especially want to review your portfolio now that stock performance has been all over the place and some valuations are high. “It’s an important time to be diversified,” he says, because it can be harder to pick good stocks in a good market. They can all look good even if they may not be right for you.”

Another consideration is moving your money into other types of investments that may fit with specific goals you have now. Trey says, “Taxes may be weighing on your mind. A move could be to consider more tax-efficient investments, such as exchange-traded funds for non-retirement accounts.”

Let Us Help With Healthy Money Moves

We’ve introduced several ways for you to make a fresh start with your finances, some of which could be more complicated than others. You don’t have to go it alone. Our financial consultants can guide you through planning, reviewing, rebalancing and more.