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6 Steps To a Stronger Financial Plan

6 Steps To a Stronger Financial Plan

A financial plan that can stand the test of time must be strategically built and meticulously cared for. Especially in today’s economy, you can’t leave anything to chance.

It’s important to take a closer look at your financial progress and investment performance and decide on actionable steps to improve for years to come. Here are 6 ways you can build a stronger financial plan.

1. Know where you stand

With any endeavor, if you don’t understand the full picture, you can’t improve.

If you don’t know where your technique is lacking, you’ll never be able to better your free throw average. You will continue to do the same exercises over and over again with little payoff.

The same idea applies to your finances. If you don’t know where there is a weak area, your finances will be susceptible to collapse.

To ensure that you understand the state of your assets, ask yourself:

  • What are the state of my assets today?

  • How are my investments performing?

  • Are my investments meeting my expectations?

  • Has my risk tolerance changed?

  • Has a major life event occurred this year that I need to account for?

If you can confidently answer these questions, you’re in a good position.

2. Set SMART financial goals

Think about what you want to do with your money—do you need to pay off high-interest debt? Do you want to buy your first home or a vacation home? Are you wanting to retire before age 55? What about paying for your children’s education? Once you know your dreams and goals, you can start making a plan.

We recommend using the SMART method when setting financial goals. These types of goals are:

  • Specific

  • Measurable

  • Attainable

  • Realistic

  • Time-bound

By setting SMART goals, you are taking actionable steps to make your money work for you.

Some financial goals can seem completely unattainable until you break it down into smaller pieces. Let’s use the SMART goal method for planning for retirement:

  • Specific: Contributing a minimum amount to your 401k or other retirement savings vehicle

  • Measurable: Contribute 10% of your annual income to your retirement savings account

  • Achievable: Set up automatic contributions, so you don’t forget

  • Realistic: Look at your budget and make sure this is possible. Will you have to adjust in other areas of your life?

  • Time-based: How much do you plan to have in your account after 5, 10, 20 years?

For many, retirement at an early age can seem too good to be true, but you don’t have to win the lottery to retire early. You just have to make a plan, and follow it.

3. Prioritize balance

Life is all about balance. Just like how you need a balance between work and your personal life, you should prioritize flexibility in your financial and investment plans.

That doesn’t mean you should spend money frivolously, but you should be able to spend money on things that bring you joy. There’s a difference between buying an $80,000 car and going on a weekend vacation with your family. One can affect your financial well-being for years to come, while the other uses your money to enrich your life.

The balancing act of life and finances will also evolve over time as your goals shift and change. Sometimes balance can be heavily weighted toward building for the future, and other times it can mean enjoying life and creating new experiences.

4. Always reassess

Regular portfolio rebalancing allows you to check in on your investments and reevaluate your goals. Whether you rebalance monthly, quarterly, or annually, regular portfolio rebalancing is crucial for the long-term success of your investments.

Again, life is all about flexibility. Your goals and values will change over time, so your portfolio needs to stay up to date.

It's like a pilot flying a plane. You are constantly checking your heading, even if everything seems to be smooth sailing. Again, you can't improve what you can't measure, and you need to measure often.

5. Don’t put all of your eggs in one basket

Remember that a strong investment portfolio is a diversified one. If you put all of your energy and resources into one venture, you’re putting your entire portfolio at risk.

Take the Tera LUNA cryptocurrency collapse, for example. Earlier this year, Tera was one of the most valuable cryptocurrencies, and then overnight, its value dropped by 99%. No one saw it coming.

The moral of the story is that the market isn’t reliable, and even if you put your money somewhere other than traditional investments, you need to take the right precautions. A healthy portfolio has a mix of traditional and alternative investments, the ratio of them will depend on your goals and risk tolerance.

6. Prepare for the unexpected

Life can change in a blink of an eye—make sure your financial plan can withstand the impact of life’s unexpected changes.

Change can be good; a growing family, a new job, or a new house. Change can also be challenging and result in job loss or illness. Having some “buffer” in your plan, like an emergency fund, will help account for unexpected events.

This reinforces the idea of diversification because if you have some liquid, or relatively liquid investments, along with some medium and long-term ones, your strategy will allow for rapid change in the face of an emergency.

Fill out your portfolio with Hedgehog Investments

To build a stronger financial plan, you need to have a diversified portfolio, prioritize flexibility and balance, and set attainable goals. If you’re looking for an investment that can diversify your portfolio and offer higher returns, consider our unique alternative investment model.


This material is intended for informational purposes only and should not be construed as legal or tax advice. Information here is not intended to replace the advice of your investment advisor or financial advisor. This information is not an offer or a solicitation to buy or sell securities. This information may have been compiled from third-party sources and is believed to be reliable. All investing involves risk, including the loss of principal.

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