The value of a financial plan isn’t the accuracy of the forecasts, but rather, the conversations and pondering the what-abouts and what-ifs. It’s about clarifying goals, aligning priorities and evaluating the projected implications of today’s actions on your future. In the words of President Eisenhower, “Plans are useless, but planning is essential.” Planning is an on-going process, not something you set and forget.
2020 left scars on humanity and the economy, from the worst pandemic since the Spanish Flu to becoming a country at war with ourselves over lockdowns and elections. Some worry if life will get better, and there are certainly issues and challenges beyond our control. On the other hand, we can control the controllable. Things can get better if you plan ahead or are extremely lucky, and I’d rather put my money on the former. Here is a Letterman-inspired Top 10 List from a financial advisor.
#10 – Lock Them Up
Secure important files and documents in vaults, physically and digitally. This includes usernames and passwords for online accounts and subscriptions. Also, make sure to share a key and combination with your emergency contact.
#9 – Don’t Forget Your Credit
Sign up for credit monitoring. Consider an online service or order and review a copy of your credit report.
#8 – Automate it
On the income side, pay yourself first via payroll deductions for your retirement, savings, and health savings account (HSA) contributions. If you’re enrolled, consider upping your contributions rate to the maximum limits allowed. On the expense side, make life more convenient and avoid late charges by setting up autopay for your bills.
#7 – Update your Budget
There are only two things to do with money – save it or spend it. One of the keys for long-term financial success is controlling what you do in both areas. The average person earns nearly $2.7 million over their lifetime.
#6 – Manage your Debt
A new status symbol is being debt free. Don’t set your debt off to the side. Make sure you include it in your financial plan.
#5 – Review and Adjust Investment Strategies
Review investment account statements with your advisor. Online tools for your 401k plan may include “matchmakers” (your age, risk, etc.), target date or lifecycle funds, auto rebalancers and more.
#4 – Prepare for the Unexpected
Bad things don’t just happen to the “other guy.” Have a cash reserve fund, a contingency plan and maintain the right insurance protection.
#3 – Protect your Estate
Update beneficiary designations for retirement accounts and insurance; and review your will, powers of attorney, trusts, titling of assets, and medical directives.
#2 – Eat your Veggies
Financial health is only one part of your journey. There’s a lot to be said about being healthy in mind, spirit and body. What improvements can you make in your nutrition, sleep and exercise routines?
#1 – Do Something for Someone Else
This act goes by many names including doing the right thing, paying it forward, and charity. Whatever the label, it is rewarding and contagious. What will you do to make this world a better place?
Some call New Year’s Resolutions folly – something that goes in one year and out the other. Some people consider them as ways to shift things in their favor. Either way, I wish health and happiness to you and your loved ones. Secure your future wisely.