August 14, 2020

5 Ways to Celebrate National Financial Awareness Day

Did you hear? August 14th is Financial Awareness Day! Most likely it is not your favorite holiday, but one that can do you some good. The point of Financial Awareness Day is to learn about how the financial decisions you make now affect your future in that scenic retirement destination.

Plant growing from money, showing that an investment is growing.

Here are five ways you can celebrate National Financial Awareness Day as you start your journey toward financial freedom:

1. Create a Budget

Let's face it, planning your spending and saving patterns on an Excel spreadsheet does not sound like the most amazing afternoon, but doing so can be beneficial in the long run. This helps forecast how much you will be able to save up for important life purchases such as a new car, home, education, vacation, and even retirement planning. But remember to be realistic with yourself, it will allow for a more pleasant financial experience overall.

  • Create a document and name it something fabulous (mine is called "Sweet Little Savings"), then start labeling the rows with your expenses: Rent, Utilities, Shoes, Groceries, Shoes… (well, you get the point). Then have the last column sum up the numbers. Voilà! Now you have a number to work with and knowledge of where you are overspending and where you can be more flexible.

2. Save for a Rainy Day

Impulse purchases can be fun to make, but often should be given a little more thought. Saving one day can be a mood booster on another day and grow your overall savings account.

  • Allocate a certain amount of funds a month that can be spent on miscellaneous "must need" items. For example, if $35 a month is allotted for these types of purchases you will be more equipped to determine what items are of the most importance, which in turn will increase your savings.
Young girl saving her money in three different jars: education, savings, and toys to signify your perspective and value on money.

So next time you find yourself at the boardwalk deciding over whether to purchase those awesome sunglasses (even though you already have six pairs sitting on your dresser at home), you will be able to ask yourself if it fits in the budget and truly fulfills a need.

3. Slow and Steady Wins the Race (In Life and In Investing) 

When is the best time to invest? Well, that is a really tricky question. One should understand the importance of investing early and steadily. Many young people are hesitant because they feel like they need to invest a lot of money and fast, but that is not the case and can incur more losses than gains. If you invest $5 every week at a 7% return, it will be worth over $11,000 in 20 years.

  • Spare purchasing that delicious coffee once a week and invest that money instead. It will put you on the right track.

4. Diversification is Key

Think about it this way - if you are forming a baseball team you would not want all your players to be skilled left fielders. No matter how many you have and how talented they are, your team will not win as many games as a well-rounded team made up of pitchers, catchers, infielders, and outfielders. This concept is the same for an investment portfolio. From recent occurrences, including the Covid-19 pandemic, it has become clear that the stock market can be very unpredictable and unstable at times. 

  • Try diversifying your portfolio by investing in alternative assets, in addition to stocks and bonds. Through a Self-Directed IRA, you can invest in alternative assets such as real estate, cryptocurrencies, startups, and other private companies, and more. This way, your finances will be more stable and you may have a better chance of obtaining wealth.   
A Diversified Investment Portfolio Infographic. Diversify your investment portfolio with private placements,

5. Knowledge is Power

Having a basic understanding of how to control your finances makes it a lot less overwhelming and more actionable. You do not have to be a financial genius to understand the different opportunities available to help grow your funds. There are many resources that you can utilize to become more familiar with this topic.

  • Educate yourself by partaking in an investment club, watching webinars, or even talking to a financial planner or IRA Specialist. 

These are just a few ways to celebrate National Financial Awareness Day, as the most important part is that you spend time planning for your financial future and there are many opportunities available to learn and grow in that regard! Even though mastering personal finances may not be at the top of your current to-do list, you owe it to yourself. It will help your future-self feel more relaxed and able to take in the view.

Have questions? We have answers!

Disclaimer: All of the information contained in our website is a general discussion for informational purposes only. Madison Trust Company does not provide legal, tax or investment advice. Nothing of the foregoing, or of any other written, electronic or oral statement or communication by Madison Trust Company or its representatives, is intended to be, or may be relied as, legal, tax, investment advice, statements, opinions or predictions. Prior to making any investment decisions, please consult with the appropriate legal, tax, and investment professionals for advice.

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