Regardless of where you are in life, you may be struggling to get a handle on your finances.
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“The younger you are and the earlier you begin saving, the easier it is long-term and the less you need to save overall,” said Leslie Thompson, founding principal at Spectrum Management Group. “For people that are midlife and looking at retirement, over the next 10 to 15 years it’s critical that they understand what it takes to get to where they need to be.”
Thompson said there are three steps to achieving financial independence:
Get spending in check
No matter how wealthy you are, don't spend more than you have. Thompson says many people overspend and it’s hard to reverse that cycle.
“It is understanding what you are currently spending, but also being able to project what you are going to need and setting aside money to purchase things when you need to,” she said.
When calculating your spending, don’t forget to take into account non-recurring expenses such as home repairs or health insurance costs.
Understand your investments
What are you invested in and why? Thompson said if you don’t understand your investments, don’t feel embarrassed. Reach out to a financial professional.
While it’s easy to get nervous about gyrations in the stock market, she said investors have to be realistic and understand how long-term assets work.
“Investment assets that you don’t need to access 10 to 15 years or more should be highly skewed to the stock market," Thompson said. "You need growth in assets to make your plan work.”
As for your short-term assets or emergency fund? Her advice is to put the funds in a low-risk investment and where it can be accessed easily.
Get estate documents in order
While this is not something you would need to do every year, it’s important to get your estate documents together. Thompson said everyone should plan for incapacitation or death. That includes getting a will, power of attorney and updating your beneficiaries.
“We are all living longer,” she said. “Just because we are living longer, it doesn’t mean we are living this healthy life. Often children need to step in to help their parents. Ultimately, they are going to need help themselves perhaps from their children or family members.”
Linda Bell joined FOX Business Network (FBN) in 2014 as an assignment editor. She is an award-winning writer of business and financial content. You can follow her on Twitter @lindanbell