August is financial awareness month and we all know how important it is to stay on top of our finances. But, financial awareness goes beyond just the basics. It’s not just knowing what you make or the age you want to retire. It’s knowing what’s going on around you, feeling secure in your financial strategy, and always having an idea of where you are in terms of your portfolio.
Here are a few area’s that are vital to understand if you want to be financially aware:
- The economy – Are we in a recession? What is GDP anyway? Why are my groceries and gas so much more expensive? The economy goes through cycles, and it’s important to have an idea of where it is at any given point. While this won’t answer questions about the future, it can help navigate decision making in the now. Are you invested appropriately? What are small changes you can do to combat inflation? These little things add up, and paying attention to market cycles and future outlooks can help you feel more confident moving forward.
- Your personal finances – Of course this includes how much you make, save and invest. But it includes things that a lot of people don’t visit often. Let’s take interest rates for example. Do you know what the rate on your mortgage is? How about that vehicle you purchased a few years ago? Knowing this small piece of information can help you make decisions on refinancing if it makes sense and potentially saving thousands of dollars in the long term. Likewise with protecting your assets. No one likes to talk about insurance, after all we pay into it hoping to never have to use it. But after a health event, a home emergency, or a sudden loss of a family member, knowing you have the financials set can save you from a lot of burden.
- Strategies available to you- Alongside your personal finances you want to be aware of the strategies to save and grow your money that are specifically available to you. This goes beyond investing in a 401(k) and enrolling in your employer’s insurance plan. It might mean having a deep understanding of executive compensation packages or having a plan to execute on your employer’s stock options that you’re granted. If you’re self employed it might look more like understanding if you have the right business structure, knowing the savings options available to you, and understanding how your business will be taxed apart from your personal income.
Being financially aware goes beyond the basics. It requires having a general understanding of market conditions, a deep understanding of your personal finances, and taking advantage of strategies that may help lower your taxes and grow your savings.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
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