With the new school year approaching and your child heading off to college, you've likely…
After the rollercoaster that was 2020 most of us expected 2021 to offer a softer ride. While this may have been true in certain respects the past year was far from a return to normal, especially where financial planning is concerned. Rising inflation and continued Covid-19 uncertainty have led many to recalibrate goals and the past two years have motivated a general shift in priorities. People are reassessing retirement timelines, rethinking where and how they want to live, and looking for ways to fund joy now (not later). All of this is pie in the sky without planning, though, which is why you must not delay in organizing your finances.
Four Steps to Financial Success in the New Year
1. Assess Your Position
The first step to renewing your financial plan is to determine where you are. Gather all financial statements from 2021 and aim to establish patterns and irregularities. Was there a period where spending went up? Did pandemic-related expenses cause you to miss goals at certain times of the year or in general? Did you, for instance, sign up for subscription services to ease the burden of being trapped indoors? Or did you invest in amenities to facilitate working from home?
As you try to track irregularities, aim also to review savings and retirement accounts. If you are not where you need to be, work out how to correct this in 2022. One key piece of advice for new financial planners is to build up new aspirations with ear-marked accounts. A vacation fund, future entertainment fund, or home renovation savings account goes far in nurturing positive thinking related to your finances.
2. Build a Budget
Opening an account to support your dreams is a great first step but doing so means little without a budget that ensures your contributions stay on track. Once you have done the legwork of assessing your position, the next step is to honestly assess income and expenses and plan accordingly. Avoid the temptation to overestimate your saving capacity and try to establish simple, straightforward goals. The less complex your budgeting, the more likely you’ll stick to it and that is what matters most.
3. Take the Long View
Short-term financial goals are a great way to maintain motivation and rein in spending but it’s long-term objectives that will make the biggest difference to your well-being. If you don’t already have an estate plan, for instance, this is the year to get one. Instituting a plan that sets you up for retirement, ensures access to needed healthcare, and looks out for your loved ones is the only way to avoid major hiccups that may undo a lifetime of careful planning in an instant.
4. Stay the Course
The turmoil of the past two years has meant many have fallen short of financial goals or tapped into savings intended for other purposes. Naturally, doing so is demoralizing and yet there is no shame in struggling when the going gets tough. While it is easy to abandon best practices when morale is low, surviving the moment means doing the opposite. Current circumstances may mean that you need to set more modest goals and this is OK; what matters most is that you continue to follow a financial plan even if it is a revised version of what you had originally envisioned.
To learn more about responsible financial planning amidst the changing circumstances of the present, do not hesitate to reach out to the Law Firm of Christopher W. Dumm either by calling 417-623-2062 or using the contact form on our website
Contact the Estate Planning Attorneys at the Law Firm of Christopher W. Dumm