Minding Your Money: Four Enduring Financial Planning Tips

women saving money jars

Give your personal finances the time and attention necessary to feel confident about where you are and where you want to go. See how your financial planning stacks up against these tips:

1. Examine Your Use of Credit

People use credit all the time for different things, but many don’t fully understand what they get into when borrowing money. The average household carried total credit card debt of $7,104 from month to month in 2019, according to NerdWallet. Carrying a credit card balance from month to month increases the cost of purchases and perpetuates a cycle of debt.

2. Keep a Cash Cushion for Emergencies

At all times, you should have a ready source of cash to dip into in the event of an emergency, such as a job loss or major home repair. On average, you’ll need enough cash on hand to cover at least three to six months of basic living expenses. Keep the reserve in a safe and easy-access account, like a money market fund.

3. Diversify Your Investments

By putting too big a portion of your savings in too few investments, you expose your savings to excessive risk. Diversification means spreading your money among a varied mix of investments so you can balance out the risk of loss on any single investment or a small number of them.

4. Take Estate Planning Seriously

All adults, regardless of their age or marital status, or the value of their assets, need to have at least basic estate planning documents in place. And it’s not just about who will get what out of the assets you leave behind; it’s also about who will care for any children you have and who will make decisions on your behalf if you’re incapacitated.

EY Financial Planning Services® is a Pension Boards benefit offered at no cost to actively-contributing members of the Annuity Plan, as well as to retired members with annuitized accounts. Call the EY Navigate Financial Planner Line at 1.877.927.1047 or visit pbucc.eynavigate.com to learn more.

This article is used with the permission of Ernst & Young LLP.