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As Seen in the Nashville Business Journal

Financial resolutions: Two steps to help you toward financial independence

Contributed by Jake Powell, Financial Advisor

As we venture forward into February, new year’s resolutions that were a hot topic in many conversations a month ago may be taking a back seat. Resolutions can be daunting and difficult commitments, which is why people tend to fall short of accomplishing their goals. Instead let me provide you with two simple resolutions you can make in 2017 to improve your financial fitness and help lead you on the path to financial independence.

Focus on what you can control.

In a world of a 24-hour news cycle, negative headlines always persist and daily stock market fluctuations often times dominate the news. When looking at long-term financial planning, it boils down to four basic controllable factors:

  1. How long you want to work;
  2. How much you want to spend both now and in retirement;
  3. How much you should save; and
  4. How many risks you are willing to take.

On average, the stock market has a 14 percent intra-year decline. This means your portfolio is not always going to go up, and a portfolio dropping in value is perfectly normal in a healthy market. The day-to-day fluctuations of the market cause many investors to stress, but it is completely out of your control. Avoid irrational, emotional investing decisions by focusing on what you can control – appropriate allocation and risk.

Develop a financial plan.

A study done by Dr. Gail Matthews, psychology professor at Dominican University, showed that you are 42 percent more likely to achieve your goals if they are in writing. Everyone has retirement dreams and goals, but what do those look like? Do you plan on working part time in retirement? Do you plan on moving cities in retirement? Do you have a strong charitable intent?

Take some time as the new year begins, and think about what your retirement picture looks like. Thinking about what you want your retirement to look like in the future will allow you to determine how much you need to save to make those dreams a reality.

Winston Churchill once famously said, “Plans are of little importance, but planning is essential.”

The physical document that is produced may be of little value, but the process of sitting down with your spouse, family, or a professional and having a conversation about your retirement dreams will help you achieve long-term financial success. Furthermore, putting those goals in writing, and developing a personal financial plan customized to your situation is invaluable to achieving long-term financial success.

Retirement and financial independence for many people is a daunting task. However, it is an accomplishment that everyone is able to attain. In 2017, it’s not too late to train yourself to stay focused on the controllable factors and work on developing a financial plan. This will put yourself on a path to financial freedom.

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