We are already two months in to 2020, where are you at on your financial goals?
At this point, things have settled down with the holidays and we have gotten through the initial rush at the beginning of the year to get caught back up. Life, however, is still busy and will continue to get busier, and that can't be an excuse to put your finances on the back burner for another year.
Let's get a jump start on your finances in 2020! Here are a few steps to start taking today:
1) Dollar Cost Averaging - have you ever heard this term? If not, it is what you are doing every month that you contribute to your 401(k) or 403(b) through work. Your employer is taking money from your paycheck, putting it into your retirement account, and then you are investing it each and every month. This allows you to take advantage of price fluctuations (stocks, or equities, don't stay at the same price each day) so that when (stock) prices are high, you are buying less, and when (stock) prices are low, you are buying more. Is your retirement account the only place you are doing this?
2) Create a System to Save - how much did you save in 2019? Last year alone, I met with over 120 potential new clients and every single one of them felt like they just aren't saving enough. The reason behind this? No one has a system to proactively same money, and if they do, most have picked an arbitrary number based on an online calculator. Now that is a great start, but what happens when the lifestyle creep becomes real. As people make more money, they spend more money. In America, we are great at spending money, it's what we do. This past Super Bowl, it was noted that advertisers spent over $450 MILLION in ads over just a 5 or 6 hour period. They do that because they know that influences peoples buying decisions. Would you want to learn about a cash flow system that could help you save more money without seriously compromising your lifestyle?
3) Pay Down Debts (Unless you do PSLF) - how great would it feel if you were debt free? The reality is, almost everyone has debt. Car loans, student loans, credit cards, mortgages, consolidation loans, 401(k) loans, lines of credit. Pick one of those (probably the one with the highest interest rate), and come up with a plan to pay that one down this year. Make sure you have some sort of emergency fund - at least $5k-$10k - in the event something comes up so you don't have to go to a credit card. If you made minimum payments on everything else but that one debt, could you pay it off in 2020?
4) Protect Your Income - what's more valuable than your income? There isn't anything I could think of that is more valuable to a family. After all, you will always need income to cover your lifestyle, today and into retirement. The need for income never goes away, the way you produce income for your family just changes over time. Until you have built assets that can produce enough income, you need to protect yourself along that journey. Anything can happen - you get sued, you get sick, you get hurt in an accident, you pass away too soon. All of those are realities of life and happen to unsuspecting people everyday. How much would you give up today to protect your income for the rest of your life?
5) Tax-Diversification Strategies - you wish you could pay more in taxes, right? This time of year, it's the topic everyone is talking about. First thing, don't wait until the last minute to get everything done or all of the information to your CPA. By the end of February, you should have all of the necessary documents to complete your taxes. Most people are worried about taxes today, but what about taxes next year, and every year after that through retirement? There are things you can do each year to help mitigate your tax burden over time. How many different strategies do you have to mitigate your tax burden over time?
These items above will help you get started to make 2020 a great year. There are tons of different ideas and strategies you will read about in each area, just make sure they are relevant to your family. Don't wait until these early, very foundational years have passed you buy to then start planning. Start today!
Check out more ideas on my website and blog, and feel free to leave me a note if you have any questions. The first meeting is always complimentary!