Ask the Expert: Money Matters Recap
Money, money, money. It gets a bad rap, don’t you think? It can be difficult to manage, hard to hold conversations about and something many people consider inherently “bad.” But it’s not.
The Bible says that the LOVE of money is bad (1 Tim. 6:10) and that loving it above the Lord can and does cause pain. Then again, loving anything more than you love God can be painful.
So, if money isn’t inherently bad, and if God has entrusted you with a little bit of it, shouldn’t we consider how to manage it well? I mean, that’s what we do with His other blessings like our families, our work and our time, right?
In our most recent Ask the Expert session, we sat down with Mary Elizabeth Twiddy, a financial advisor, to talk through how to best manage the money we have. Mary Elizabeth offered a 10-step process for thinking about how we work with our money:
Develop your strategy. Think about your goals first. Do you want to fund college for your kids, give to a charity, save for retirement?
Understand your risk. This will be different for everyone. Decide how much risk you and your family can tolerate before investing in anything.
Diversify. Spread your risk out over a variety of investments so you're not too heavy in one area.
Stick with quality. Value longevity over a quick win.
Invest for the long term. Investments are about time in the market, not timing the market.
Have realistic expectations. Think about what you need, and be realistic about your expectations for each investment.
Maintain your balance. Over time, money can fall out of alignment with your goals or risk tolerance. So, ensure that they’re kept in balance.
Prepare for the unexpected. Have an emergency fund! This is typically three to six months of expenses in a cash account. As an example, an employee with a secure job might consider three months of funding, whereas a business owner with more risk might consider six months or even more.
Focus on what you can control. Enough said there.
Review your strategy regularly. Goals change over time, and you would be wise to adjust how you are spending/saving your money based on your long and short-term goals.
Mary Elizabeth is passionate about helping women understand their money, so she’s offering a free, four-week series focused on financial advice for female investors starting May 4. Click here for more details.