As we come upon a new year it is a good time to reflect on your finances and set goals.
Video Recap: https://youtu.be/yKdGYEjhTB0
In this episode, we discuss 12 steps you can take action on to improve your financial outlook. If you’re looking to get off on the right foot in 2021, print out this checklist and run through it to find improvements you can make now.
12 easy steps you can take to improve your finances
Record your financial goals and positive habits. Writing things down is a great way to hold yourself accountable and see how far you have come. When you write down your goals you can refer back to them later. Our clients have the added benefit of using our Global Dashboard to help them keep track of their financial goals and habits.
Check your estate documents. This is something that we all push off until later. Do your heirs a favor and review your estate documents now. Are they up to date? This can save your family a lot of headaches.
Set up an income and expense tracking tool. You need to have an understanding of how much money is coming in and going out each month. When you start tracking your income and expenses you may discover a lot about yourself. It’s also a good idea to compare your cashflow this year with years past. What has changed?
Make sure you have emergency savings. The general recommendation is to have 3-6 months in an emergency fund, however, this can be specific to you and your situation. You may need more. If Covid-19 has taught us anything, it’s that the world can throw you some unexpected situations and it is important to be ready. Where is your emergency savings fund?
Match and max your 401K. Are you taking advantage of the company match in your 401K? Can you amp up your 401K? It is important to remember that the company match amount is not the maximum that you can save. $19,500 is the IRS maximum per year. Are you maxing out your 401K this year? Did you have to make any adjustments to your savings?
Review your investment strategy. There have been so many changes this year in the stock market this year. Your stock allocation may have grown so it is a good time to check whether your allocation is in line with your investment strategy. Remember that investment behavior is much more important than individual stock picks.
Make sure you are maximizing tax efficiency. Are your assets the most tax-efficient? All accounts are taxed differently. Think about what assets are best to hold across which accounts.
Pay down high-interest debt. Many times we tend to ignore our high-interest debt, but it is important to understand how often you use debt. Focus on the interest rate and balance of your debts. What is your overall debt? Is it good debt or bad debt? Listen in to hear what we think of different types of debt. Our thoughts may surprise you.
Order your free credit report. Every year around the holidays there is an increase in fraud. Try using Credit Karma to keep track of your credit score.
Review your insurance policies. Do you still need life insurance, disability, or an umbrella policy? You may be carrying too much insurance.
Show me the money! Understand where your accounts are and how they are structured. Keep an inventory of where your accounts are and consolidate them if needed. Its easier to make decisions when you are organized
Communicate with your spouse. Are you both on the same page financially? Has your financial situation changed this year?
After listening to this episode feel free to download this sheet and print it off to use it as a checklist.
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How do you pick the books you read? Do you get book recommendations from friends or are you in a book group? Do you use an Amazon Wishlist or social media to help you discover what you want to read next? In today’s episode, we have some book recommendations for you to consider. We try to bring you a variety of genres ranging from finance to self-help, to fiction. Check out our favorite books of the year and let us know which ones you have read or plan to read.
Digital Minimalism might be the book for you if you are addicted to your smartphone or tablet. If you feel the need to constantly check your notifications you might want to check this book out. The idea behind Digital Minimalism is to help reduce the time you spend attached to yan electronic device. It discusses the psychology surrounding our need to constantly check those notifications and offers tips to scale back your tech usage. If you enjoy this book you also might enjoy Cal Newport’s other book called Deep Work.
Chop Wood Carry Water is a quick, 110-page read that offers life lessons that are learned by a kid who wants to become a samurai warrior (think Karate Kid). This book is about learning to appreciate the process behind the mundane work you have to do in life. The thesis is that if you can focus on doing the boring everyday work with excellence then you can make great things happen. The book encourages you to take each challenge you face not as a test but as an opportunity to learn and grow.
Redemption is a work of fiction by David Baldacci which is a mystery-thriller. The main character is a Baldacci favorite, Amos Decker. Redemption makes for an exciting beach or vacation read. Like binge-watching a tv series, you’ll want to rush through it quickly to discover how it ends.
The book Principles is another self-help book written by Ray Dalio. It is essentially laying out his 5 step process for building success. He encourages readers on how to deal with setbacks and continue to move forward. These are the 5 steps that he covers in the book:
We also have several books on our wishlist or that we plan to read soon. Mike is looking forward to reading Personal Financial Planning for Executives and Entrepreneurs to help him provide the best service possible for his clients. The Happiness Advantage is another book Mike would like to read that redefines success and happiness.
Chad is looking forward to reading Messy Marketplace which is about buying companies. He thinks this will help him serve his clients who are in the process of selling businesses. The Family Board Meeting is a book that encourages people to enjoy the experiences they have with their children. The Algebra of Happiness and 30 Lessons for Living are 2 more books that he’d like to read.
Mike's turning 40! As he hits this milestone, they guys explore the lessons he learned over more than 17 years in the financial services industry. Mike and Chad will reflect on the top 10 lessons learned from these experiences in this week's episode of the Financial Symmetry Podcast.
Top 10 Investment Lessons Learned
Did you meet your New Year's Resolutions last year? Have you set goals for the New Year? In this episode, Chad and Mike discuss the five small steps you can take to make your resolutions attainable.
Two-thirds of people admit to procrastinating when it comes to their retirement planning. In fact, the average person spends more time planning a vacation then than do planning for retirement.
Non-urgent financial tasks love to find cracks in our to-do list, falling to the bottom fast. Mark Twain humorized this concept well with his quote, “Why do today what you can put off till tomorrow?”
Jason Zweig captured these problems in his book Your Money and Your Brain. He wrote “Unpleasant tasks often lead to pleasant results down the road. We often procrastinate the worst on things that are good for us [with] saving more in our 401(k)” being near the top. “So the problem is not that we don’t know what’s good for us. It’s just that tomorrow seems like a better time to do it than today.”
In this episode, we share some of the best reasons we’ve read, personal stories, and tips we’ve used to combat financial procrastination.
You can also check out Chad on the Stacking Benjamins Podcast on a special Halloween edition. He shared 5 horror stories we see regularly from when we first meet with people.
This week, we're back up with the conclusion of our college planning episode! Mike takes a look at financial strategies for the final few years before your child goes to school, and what you can do to maximize your funding during this time.
This week, we're covering one of Mike's favorite topics: college planning. Learn what to do during the early years of your child's life to ensure you have the resources you need to support their education.
In this episode Chad and Mike discuss the top 5 questions they hear from their prospects, with special guest Allison Berger, CFP®.
So many of us get charged up and rattle off an impressive list of goals but then struggle to follow through.
The disconnect between creating and accomplishing is where life change gets stuck. Months pass and we realize our lives are no different.
Where did progress stop (or never begin)?
Often, it's when life's curveballs throw us off our game. Even though we know the surprises will come, we're not prepared when they show up.
I thought about this recently on a Saturday morning, when my mind drifted to how enjoyable it would be to extend our screened porch. Wait, did this just become a goal? What about the 10 year anniversary trip we want to take next year? We also know one of our cars will need replacing in a few years. If we do all three of those things, will we be able to hit our charitable and retirement savings targets as well?
That’s just it. Financial goal planning is a fluid process. You have to place a value on how important that thing on your mind right now is to the list of other priorities you've thought about on other Saturday mornings.
Without prioritization of goals, we allow our impulses to rule our decision-making. This thought process ignores your plan, pushing the things that aren't as much "fun" to the bottom of your list.
Having an effective monitoring process increases your odds that follow through will happen.
Many of us don't keep a running list of things we want to accomplish. This is why when asked about our goals, we freeze and find it hard to get specific other than "to assure we are maximizing our investment returns."
Knowing why you want to get the best investment return helps keep the focus in the right direction. It also helps identify quantifiable steps that will help you get there.
Goal setting begins with recording. So often, I will be talking with someone that triggers an idea I want to pursue. If I don't get it down quickly, the idea is forgotten.
One of the most practical digital tools for this is Evernote. This helps create a central location of all the ideas that are up next on the to do list. From small goals to large goals.
Having a list, helps compare the newest goal to all the other goals you have in the queue. For example, is the next home project more important than maxing your 401k this year? Depends on the person and what your long-term plan is. If retiring early is important to you, then 401k savings matters more now than a kitchen remodel.
We also know our desires can change quickly, which is why prioritizing regularly is vital.
This is why we encourage setting a few different lists.
Some people like to add a lifetime category which helps shape more vision type of actions. Are you doing the small (and sometimes mundane) things today that get you closer to the lifetime goals?
Assigning time-frames and dollar amounts helps you measure success.
Once you create the ideas of where you want to go, we discuss the best way to implement goals. Even though we all are incentivized differently, a process keeps us moving forward.
Some things are easy to implement and can be done very quickly (setting up Roth IRA contributions for example). But not every goal can be tackled quickly.
If your main goal is lowering spending, then it’s more of a gradual process that takes tracking and regular review. While a future large purchase requires diligence in hitting saving targets.
Consequently, we set up our systems so the top goals for each client are displayed each time we interact with them.
Some examples include next car purchases, home projects, inheritances, or retiring early.
But setting the goals is not enough. It requires consistent accountability partners. This is why we have automated follow ups along with scheduled phone calls to follow up. Checking in after 2 weeks, 2 months, 6 months and a year keeps the focus front and center.
Goals that are not measurable tend to fizzle out.
So after recording and monitoring, if a goal was too vague, it's time for an adjustment.
Personally, I like to revisit my goals every 90 days, which allows for any adjustments as changes arise. At a minimum, reviewing your objectives at least annually will allow you to refocus any goals that are growing stale.
The end of a year presents a great opportunity to look back and see where you stand. Seeing progress motivates you to continue progress.
Personally, this process starts during the year. I keep a document in Evernote, that is called “Key Accomplishments.” During my quarterly review, I take a moment to record all the things I can think of that were steps forward.
This list includes it all (small and big accomplishments). From wakeboarding for the first time to reading a book I've wanted to read. You'll be surprised how fulfilling it is to look back after a year and see all you've done.
For next year, I plan to set a few stretch goals (from Steve Sanduski's podcast "Between Now and Success"). Goals that I know I won't meet but will motivate me to try. I'm betting I will be surprised by the progress.
So what goals will you focus on this year?