Rich or poor, it’s never too late to make a financial plan – San Bernardino Sun

This year, we may have made the same resolutions as in the past – lose weight, exercise, save more or pay off debt.

In fact, 65% of Americans 18 and older consider it a financial goal for the new year, according to a 2021 study by Fidelity Investments. The top financial goals are saving more money and paying off debt, with the overall goal of creating more peace of mind. After all, who doesn’t want financial security?

Many of us started January excitedly by setting resolutions but soon lost our focus and ended up forgetting about these commitments. New Year resolutions often fail because our goals are too broad to make real changes in our lives. Goals need to be clear and specific, such as paying an extra $500 per month on credit card debt or scheduling a meeting with an attorney to discuss and prepare estate planning documents.

Managing your finances is not a New Year’s resolution that will be forgotten in February. It must be a way of life. Designate January as the month to review and then make the necessary changes to meet your financial goals. Pencil during this time every year and consider it an audit of your personal finances. You should complete this task every year in the same time frame as you would with your tax return.

How do you know if your financial situation is better or worse than last year if you don’t compare the facts?

What is your net worth?

Whether your net worth is high or low, you should understand what it is. Without understanding where you are financially right now, how do you plan for your future? Calculating your net worth sounds complicated, but for most people, it’s not. Make a list of your assets (what you own). Then subtract liabilities from assets (what you owe) to determine your net worth. If you’ve never calculated your net worth, use this year’s net worth report as a future benchmark.

Is your net worth increasing or decreasing? Understand why it has changed. Are you saving more, is your debt growing, or is the stock market up or down?

Create a budget

Most people know how much they pay on mortgages and car purchases, but few pay attention to how much they spend on food, Instacart, or online, especially if they use a card. credit to pay for those purchases.

Budgeting will help you understand how and where you’re spending your money. Track all expenses for a minimum of 30 days or better, a whole year. First, write down your monthly expenses and then add up additional expenses. As you track your expenses, think about the following:

– How much will you need to save to maintain your standard of living in retirement?

Are you maximizing employer matching and annual contribution limits in your retirement plan?

– Are you saving enough to meet your short-term and long-term goals?

– How can you reduce expenses and fixed expenses?

– Are you using your credit card every month because you are short of cash?

– How can you eliminate your debt?

Plan big-ticket items

Are you planning to move house, buy a car, replace your roof, or pay college tuition in the future? Do you know how much this will cost, and have you thought about how you will pay? If money isn’t available in your bank account, outline your schedule, break down expenses into monthly expenses, and add expenses to your budget.

To avoid unwanted debt accumulation, what changes can you make in your spending right now to save for this goal?

Prepare for the unexpected

As we were reminded recently, life can change suddenly and quickly. Do you prepare to the best of your ability for job loss, illness, disability, natural disaster, or litigation? Insurance and savings can help protect you against unforeseen events.

Do you have an emergency fund with at least six months (or more) of spending in a savings or money market account?

– Are you adequately insured to meet your risk?

– Do you have a disaster plan in place and ready supplies when an unexpected disaster occurs?

If you’re tech-savvy, consider storing your inventory and important documents on a portable hard drive. You should also keep copies of your birth certificates, passports, trusts, wills, trust documents, home improvement records, and insurance policies in a small, safe (fireproof, non-fireproof) evacuation box. waterproof which you can lock is best). you can get in a hurry in case you need to evacuate immediately.

Look at Portfolio Allocation

Does your current portfolio strategy in retirement and investment accounts meet your goals and objectives? Is the investment risk appropriate for your personal risk tolerance? Is your portfolio increasing or decreasing in value? In 2021, the S&P 500 Index is up more than 26%. If your portfolio lost money last year, it would be wise to know why.

Protect your property

Without appointing the appropriate beneficiaries, trusts, wills and other basic documents, the fate of your estate or children can be decided by attorneys and tax authorities. Probate fees, taxes and attorney fees can erode your estate and delay the distribution of assets when your heirs may need them most. If your estate planning documents are not available or need to be updated, schedule an appointment with an attorney who specializes in estate planning.

January is an ideal month to spend time reviewing your finances. New tax laws, higher retirement maximum contribution limits, or lower required minimum distributions from your retirement account may affect you. Take charge of your future, schedule time to do an annual audit, identify and eliminate red flags, and implement strategies to achieve the best financial results.

Teri Parker is vice president of CAPTRUST Financial Advisors. She has been an intern in financial planning and investment management since 2000. Contact her by email at Rich or poor, it’s never too late to make a financial plan – San Bernardino Sun

Tom Vazquez

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