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October 3rd was and nbsp;World Financial Planning Day, and we’ve recently marked the 10th anniversary of the financial crisis. As we reflect on the past ten years, now is the perfect time to re-evaluate your financial strategy and make sure you’re avoiding the personal finance mistakes made a decade ago
Follow this check-list of best practices, inspired by the events of the crisis and developed by CFP®professionals, to keep yourself on track:
1. Get Personal. and nbsp;Develop a thorough understanding of your personal situation (cash reserves, debt and current retirement contribution level) and let that guide your decisions.
2. Develop a Cash Flow. and nbsp;Identify how much money is coming in and how much is going out to develop a short-, intermediate- and long-term game plan.
3. Maintain a Healthy Emergency Reserve Fund. and nbsp;Keep a safety net(six to 12 months of expenses for workers and 12 to 24 months for retirees) to avoid selling assets and/or invading retirement accounts.
4. Maintain a Diversified Portfolio. and nbsp;One of thebest ways to prevent emotional swings is to create and adhere to a diversified portfolio that spreads out your risk across different asset classes.
5. Keep Making Retirement Contributions. and nbsp;If you need to reducethe amount due to unforeseen circumstances, try to at least capture any company match.
6. Manage Cash. and nbsp;If you need money within a year or so, keep it in a safe place, like a checking, savings or money market account, a short-term Certificate of Deposit (CD) or a bond.
For more information and an interactive timeline of events leading up to the economic collapse, check out my fellow CFP®Board Ambassador, Jill Schlesinger, and her blog post, and nbsp;“10 Years Later: Lessons from the Financial Crisis of 2008.”
