It’s A New Year! Is It Time To Reevaluate Your Financial Plan?

A new year is often a time for fresh starts, intentional planning, and renewed motivation to conquer goals and accomplish things that are important to you. And after the year we just had, a fresh start is just what we need. As you transition into 2021 and all this year will bring, use this time to take a look at your financial plan to make sure it’s still on track to get you to your goals, no matter how many obstacles life has thrown at you lately! Here’s how to get started.

1. Create Your Budget

Get R.E.A.L about your budget? The foundation of any financial plan is knowing exactly how much you earn, how much you spend, and what you spend it on. So your first task is to Record everything you spend for at least three months (the longer, the better). This can be done by going old school and carrying around a small notebook, entering your expenses into a budgeting app on your phone, or automating the process with a service like Mint. Evaluate where your money is going. Most of us are good at frivolous spending. What can you cut? Ask yourself what’s really important. Is your spending pattern supporting what you value most in life?  Let go of past mistakes.  We’ve all made bad financial choices.  Stop punishing yourself about the past and get clear about your future.

2. Set Financial Goals

Now that you have a clearer picture of where you stand, it’s time to define where you want to be in the future. When would you like to retire? What do you want your lifestyle to look like? How much will you need in your retirement account to afford this quality of life? Retirement is a big part of financial planning, but don’t forget to include all your short-term and long-term goals. Want to buy a lake house in 10 years? Pay for your children’s education? Donate to charities? Write it all down.

3. Design A Savings Road Map

So far you’ve benchmarked where you are now and where you’d like to be. Now it’s time to make a plan to bridge the gap. Assuming an average return on your investments, how much do you need to put away each month to reach your goals on time? Does your budget allow for this? If not, what steps can you take to either reduce your monthly spending or increase your monthly income?

4. Put Together Your Portfolio

Unfortunately, stockpiling your savings under your mattress won’t get you very far. Inflation means things get more expensive each year. Your long-term savings needs to pace the cost of goods to ensure you don’t lose purchasing power in retirement.  The key to achieving your financial goals is creating an investment portfolio strategically diversified to meet your personal needs. The earlier you get this started, the more you’ll benefit from the exponential power of compound interest.

5. Define Your Exit Plan

The last part of your plan is creating exit strategies for each goal. You need to be able to access your money when you need it. If you skip this step and just dump all your savings into retirement accounts, you’ll be in for an unpleasant tax surprise when you want to pay for the aforementioned lake house or college education. So keep in mind when you’ll need to access your money and which accounts to set up to best match the timing of the need.

6. Schedule Check-Ins

At this point, you’ve set up your plan, but your work is not quite finished. Now it’s time to maintain. You’re bound to experience many life changes between now and retirement, and you must adjust your plan accordingly. Check-ins are easily forgotten, so it’s best to schedule it into your calendar. Aim to review your progress every six months or whenever your life situation changes (income change, change in expenses, change in goals, etc.).

We’re Here To Help

From a bird’s-eye view, it seems like a straightforward process, but we know that it can be easy to get stuck in the details and feel overwhelmed. But don’t worry! Our team at Fusion Financial Group is passionate about designing personalized financial road maps to help people achieve their goals.  If you’d like to learn more about how we can help you set up your financial plan, schedule an introductory meeting with Nelisha by calling 303-793-3202, booking online here, or emailing her at [email protected].

Author: Keri Pugh
Keri Pugh is a Wealth Advisor with Fusion Financial Group, an independent financial planning firm and fiduciary based in Denver, CO. Keri has over 20 years of experience in the industry, as both a financial advisor and Principal. She obtained a bachelor’s degree in Finance from the University of Northern Colorado and is an alumna with national sorority Delta Zeta. Keri holds a variety professional licenses, carries the esteemed mark of Certified Financial Planner (CFP®), meeting rigorous education and experience requirements in key areas of financial planning, as well as the designation of Accredited Investment Fiduciary (AIF®), a symbol of her dedication to upholding the fiduciary standard for clients. As a wife and mother to two young children, Keri is particularly drawn to working with thriving families and women. This is not only reflected within her practice but also in her regular sponsorship of the local PTA and volunteer work with the elementary school. Outside of the office, Keri enjoys traveling, skiing, and the Colorado great outdoors with her family. She often lines up movie marathons for the family and, in line with many clients, is a beginner golfer and a wine enthusiast. To learn more about Keri, connect with her on LinkedIn.