Take Control: Simple Financial Tips for the Long Weekend
The long weekend is here! It’s a great time to relax, but it’s also a perfect opportunity to hit the pause button on your busy life and give your personal finances a little love. You don’t need to be a Wall Street expert to get started. While the stock market may be closed, you can use this time to take a few simple, smart steps that will set you up for success and help you feel more confident about your money.
1. Check and Straighten Out Your Portfolio
Think of your investment portfolio like a pie chart. When you first started, you might have decided that you wanted, say, a big slice for stocks and a smaller slice for bonds, depending on your plan. But over time, the market changes. Some of your investments might do really well, and their “slice” of the pie might get bigger than you originally intended. This is great, but it can also change the balance of your investments.
This process of bringing your portfolio back to its original “recipe” is called rebalancing. You can do it by looking at your accounts and seeing if the percentages still match your plan. For example, if stocks have grown to a bigger percentage of your portfolio than you planned, you can sell a small portion of them and buy more of your other investments, like bonds. It’s a way of making sure you’re not taking on more risk than you’re comfortable with and keeping your long-term plan on track.
2. Find Your Investing “Comfort Zone”
Your comfort with taking on risk is a key part of your investment strategy. As a new investor, it’s important to understand what your “risk tolerance” is. Simply put, this is how you would feel if your investments dropped in value. Would you be worried, or would you see it as a normal part of the process?
Your personal situation can also change your comfort zone. If you’re just starting your career, you have many years for your money to grow, so you might be comfortable with more risk. If you’re saving for a major goal that’s only a few years away, like a down payment on a house, you might want to be more cautious. Ask yourself a few simple questions: “If the market had a big drop, would I panic?” or “How would a big loss affect my life goals?” Answering these questions can help you make sure your investments are in a place that feels right for you.
3. Set a Financial “Roadmap”
Investing without goals is like driving without a map—you don’t know where you’re going or how you’ll get there. The long weekend is the perfect time to think about what you are saving for. Are you hoping to save for a trip, a down payment on a home, or for your future retirement?
Your financial goals give you a reason to invest and a way to measure your progress. You can start by writing them down. Make them specific, like “I want to save $15,000 for a down payment in five years.” Once you have a clear goal, it’s easier to create a plan to reach it. For example, if you know you need to save a certain amount each month, you can set up an automatic transfer to make it happen.
4. Grow Your Knowledge
A smart investor is a knowledgeable investor. You don’t need to become an expert overnight, but you can use some of your free time to learn. This can be as simple as learning the difference between a stock and a bond, or understanding what a mutual fund is.
There are many free resources available online, from articles and videos to podcasts. Taking even a small amount of time to learn will help you make more confident decisions about your money and help you avoid common mistakes. When you understand the basics, you’ll feel more in control of your financial future.
5. Tackle High-Interest Debt
Before you try to grow your money through investing, you should make sure you’re not losing money to high-interest debt. Think of high-interest debt, like what you might have on a credit card, as a heavy weight tied to your portfolio. The interest rate you pay on that debt is often much higher than what you might earn from an investment.
For example, a credit card could have an interest rate of 20% or more. Paying off a balance on that card is like getting a guaranteed 20% return on your money—something that is almost impossible to find in the stock market. It’s often the best “investment” you can make. The long weekend is a great time to look at your debts and make a plan to pay them off, starting with the ones that cost you the most in interest.
Disclaimer: This article is for informational and educational purposes only and should not be construed as financial advice. Always consult with a qualified financial advisor to discuss your individual financial situation and goals.
