The Becoming Financially Capable Series is brought to you by Chairvolotti Financial and 401Karat.

Whether it is budgeting for inflationary pressures or planning for significant life events such as switching jobs or buying a home, personal finances are at the top of most people’s minds these days. There are many ways to become financially capable in todays world, but being educated in the ways to prepare yourself is the best first step. In this post and the series to follow, we will explore the all the important aspects of becoming financially capable and how you can get your self in the right position. Below is a list of the top 8 things you should start doing now to help grow your wealth.

Budgeting and Saving

One of the simplest and most important adages to remember in personal finance is to “spend less than you earn.”  On top of this, it is smart to reduce expenses and set “SMART” financial goals.

Debt Management

While “spend less than you earn” is sound advice, is it not always possible, especially in a society that relies so heavily on credit. With this in mind, the ability to understand and manage debt is vital.  It is important to know how to manage different types of debt, such as credit card debt, student loan debt, and more. Understanding your credit scores and ways to improve it is also vital to you financial capability.

Investing Basics

Being able to invest successfully is an integral part of achieving financial freedom. Understanding topics such as dollar-cost averaging and the power of compound interest can help you better know ways of investing. It is also important to have an understanding of how to make investments such as stocks, bonds, and mutual funds function.

Retirement Planning

Most Americans who are employed participate in some type of  employer sponsored retirement account such as a 401(k); however, there is more to retirement planning than simply participating in your employer’s plan. Knowing the different types of strategies for saving for retirement, such as contributing to a 401(k) or IRA, as well as the different types of contributions that can be made is key when planning for retirement. While planning it is important to be able to estimate retirement expenses and how to maximize your Social Security.

Financial Planning for Major Life Events

Odds are, you’ve either recently gone through or are planning on experiencing a major life event. While it can be exciting to buy a new home, start a family, or switch jobs, setting and developing a financial plan is a vital step in this decision-making process. Getting proper advice on how to set and create a financial plan for major events that aligns with both the reality of one’s financial situation and their personal life goals can greatly benefit everyone and lead to  a more financial capability.

Taxes and Tax Planning

While Benjamin Franklin famously crowned taxes as one of the certainties in life, it doesn’t mean that we can’t be savvy about how we deal with them. Knowing the different types of taxes and strategies for reducing tax liability, such as contributing to retirement accounts and itemizing deductions can help save you money in the long run. Also, tips on planning for tax payments can help you better create a payment plan that is best for you and your personal situation.

Risk Management and Insurance

We sincerely hope that everyone will achieve the life and financial freedom that they dream of, but we know that life doesn’t always go as planned. However, just because we don’t know when life changes can occur doesn’t mean that we can’t be prepared. Risk management and strategies for protecting against financial risks, such as purchasing insurance is a great way to be prepared when life throws you a curve.

Estate Planning

Anyone familiar with the previously mentioned Benjamin Franklin quote knows the other certainty in life he mentioned: death. While it is uncomfortable to think about one’s own mortality, it is important to prioritize the future well-being of our loved ones over these uncomfortable feelings. Estate planning and the strategies that can help one to protect their assets and provide for their loved ones. We will delve into topics such as wills, trusts, powers of attorney, and more are a helpful avenue when dealing with these situations. Its also important to know the best way of selecting an executor or trustee, minimizing estate taxes, and how to properly designate beneficiaries.