January 2, 2023
Erica Bouchard, CFP®
January is not only a perfect time to implement your personal and professional resolutions – it’s also a great reminder to review your financial goals, plans and strategies. Decades of data have proven that successful financial outcomes are more likely to happen because of purposeful and thoughtful planning. As we start 2023, we recommend our clients reflect on their personal situation over the past year and consider how changes may impact their current plans.
We’ve compiled a checklist to get your year off to a fiscally fit start:
1. Get Organized
At the start of the year, it is helpful to have a full picture of what your anticipated overall income streams and cash requirements are going to be for the year. Plan for larger expenditures, especially if you will be withdrawing from your pool of investments to pay for them. You don’t want any needed funds at risk in the stock market; with advanced notice, you may reduce any associated tax liabilities as well. Make sure you have a good account of all current assets and liabilities; it’s essential to know what dollars you have available to you.
2. Identify Changes in Your Goals
Each year can be filled with surprises in your personal situation that may change your long-term goals and current objectives. Without a clear end goal in mind, you won’t know whether you’re saving too much or too little to meet short- and longer-term objectives such as funding education, buying a home or retiring. It’s important to reevaluate your goals annually as with life events such as marriage, the birth of a child, divorce, a new business venture or death of a loved one.
3. Adjust Your Plan Accordingly
When we work with clients, our foremost concern is ensuring they aren’t at risk of running out of money during their lifetime. To do this, we build a plan based on the context of their current needs, wants and wishes. By starting with your goals in mind, you can revise a savings plan, update a portfolio allocation strategy, calculate a realistic retirement date and more.
While planning is vital for a healthy financial life, it’s equally important to make sure you aren’t suppressing your lifestyle too much along the way to retirement. Life is meant to be enjoyed! While we focus a lot on non-working years, you want to have fun during your working years as well. With proper preparation, you can strike that balance between planning for the future and living in the now. Or as we like to call it, giving yourself “permission to spend.”
4. Develop and Maintain a Budget
Regardless of your economic position, it’s essential to know where your dollars are going. This is often the single most difficult form of homework for clients. Your budget and your plan are only as good as the assumptions being used. If you are looking for a starting point, there are some great online options such as Mint and You Need a Budget. If technology isn’t your thing, you can also utilize a basic budget template. Please reach out to us if you’d like a copy of that template.
Once you know what your goals, spending needs and available monthly dollars are, it’s time to determine if you are falling short or have an overage. To account for all of your money, we suggest assigning every dollar to a spend, save or give bucket.
5. Maximize Your Savings
To ensure you are maximizing your money, work with your advisor to review popular savings opportunities, such as:
6. Protect Your Wealth
Have any changes over the last year impacted how your dollars are protected? With proper planning you can safeguard your wealth from creditors, fraudsters or an unforeseen life event. Keep these items in mind as you consider the plan you have in place.
Rarely does one’s plan withstand the test of time. Life inevitably changes, almost as quickly as tax and estate laws. Plans should be created, implemented and monitored for changes; a good financial advisor can help hold you accountable, provide proactive advice and be your best advocate.
About the author: Erica Bouchard, CFP®
As a respected, resourceful problem solver and an enthusiastic collaborator, Erica delivers comprehensive long-term plans to her clients, all while accounting for complex dynamics and their ever-changing needs. She invests her time and energy in rigorous continuing education and is committed to bringing skill, insight and confidence to Buckingham client relationships.
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