New Year’s Resolutions—Strive for 2020 Vision for your finances!

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Here are 10 tips to get healthy with your finances in 2020:

  1. Start tracking your expenses. Know where your money is going every month. This does not need to be complicated. There are many resources out there to assist you…ranging from using an Excel Spreadsheet, Quicken…or an app that can be downloaded to your SMART phone called “Every Dollar” (https://www.everydollar.com/). Or just the old fashioned way….bank statements, paper and a pencil!! Getting started is the hardest part.
  2. Make sure your estate plan is current. This includes wills, any trusts you have established, Power of Attorney and executor designations. Confirm all beneficiaries on your Qualified (retirement) accounts as well as any Transfer on Death (TOD) instructions you have on your NON-Qualified investment accounts.
  3. Create a FINANCIAL ORGANIZER. There are many tools available which will allow you to document and store all of your financial information in one place.  Organizers that will have sections to list out all of your financial contacts, account numbers and policy numbers…your attorney’s name and contact information, your Healthcare Provider details or your insurance agent/policy information. At Compass Financial we have put together such a packet (either a Word Document to print and fill out or an electronic version) that I would be happy to send your way if interested.
  4. Rebalance your portfolio. What is the total return on your investment portfolio for 2019? Look back over your accounts to see if any changes need to be made.  The S&P 500 is up +28% year to date…..now may be a good time to harvest some of that growth and diversify.
  5. Take inventory of all of your insurance policies. If necessary shop around for more economical rates without jeopardizing coverage….increasing your deductible(s) can potentially save on the premiums. Interview local, independent insurance agents in your area that can compare different insurance carriers for you.  Make sure you have enough life, property/casualty and disability coverage. Look into an HSA.
  6. Pay Down debt. Whether it be credit card debt, a home equity loan or simply your mortgage, determine if you have any surplus monthly income at your disposal (refer to bullet #1 to determine this!) to pay extra toward the debt per month. Check your credit report at com. Once credit cards are paid off, in order to maintain the history on your report, don’t close the accounts……but If necessary, cut up cards if you are tempted to use them or freeze them in a glass of water and store in your freezer!
  7. SAVE for a rainy day!! Set an emergency fund/cash reserves goal.  There are different schools of thought here….Initially, if there is no emergency fund saved, set an attainable goal of 2 to 3 months of your household expenses…then build up to 4 to 6 months. This can be done in an interest bearing account, not subject to market risk – similar to a money market fund or high yielding savings account. Or….after cash purchases, throw your excess change into a jar and save for a vacation or the next round of birthdays…or save for next Christmas!
  8. As you prepare your taxes, take a look at the bigger picture. If you are eligible …consider Roth IRA or Roth 401K contributions. (FYI….there are income and contribution limits to be aware of). Determine if you are having enough withheld from your paycheck…or are you withholding too much?  It is nice to get that refund at tax time, but the ultimate goal is to break even.  Consider Charitable Contributions. Consult with your tax preparer in all of these areas.
  9. Look into your employer’s benefit package to ensure you are taking advantage of all that is offered. In addition to the base package offered as an employee, there may be some voluntary benefits that are available to you that can be paid with pre-tax payroll deductions. (Long Term Disability, Additional Life Insurance for your or your spouse/dependents, vision and dental coverage).
  10. If you have not done so already, develop a relationship with a financial advisor. Many firms offer a free hour consultation or a ‘second opinion’ to review investment accounts, put together college projections for kids and create a retirement plan for you.

 

Take the first step in 2020 by picking one or two of these ideas to get your New Year off to a great financial start!!

 

 

 

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Michele Bjorkgren, Financial Advisor
Compass Financial
p. 515.327.1020 x13
e. michele.bjorkgren@compassiowa.com
Securities Offered through LPL Financial
Member FINRA/SIPC

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A little more about us:
Compass Financial is an independent, fee-based financial advisory firm in West Des Moines, Iowa. The Compass Team helps individuals and families develop an inspiring vision of their financial future and a realistic strategy.

By listening closely to our clients’ true needs, wants, hopes, desires and dreams we are able to combine Wealth Management and broad Financial Planning customized to each individual situation. It’s our goal to assist you in developing a personalized financial road map. The results from the process should include confidence that comes from planning. As we all know, life happens, sometimes ambushing the best laid plans. Accepting a new reality and adapting the financial plan is work we have done many times for our clients.

We also offer Financial Check Up or Second Opinion Services to those who want to enhance the service they are already receiving. This should lead to a better understanding of your current plans and give added confidence to your existing advisor relationship.

Sometimes life’s biggest challenges come in the form of transitions, retirement, marriage, health issues, divorce, unexpected loss, or even college savings. Our team at Compass has experienced many of these life transitions, it’s our hope to come alongside you and your family. These defining moments of life provide opportunities to implement financial strategies that can have long lasting impact. The first step is always the most difficult, but can also be the most rewarding. Please Contact Us today to receive your free, no obligation, one hour initial consultation!

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