Broker Check

Financial Planning: New Years

| January 10, 2019

The Overview

This article is designed to be simple in nature. Everyone can benefit from it, but I wanted to target people who need help with some of the foundational elements of financial planning.

New Year’s Goals

There's something about the New Year that makes us all want to look at our finances with a fresh sense of urgency. Maybe it's the incoming credit card bills from the holidays, or the feeling that this year is going to be the year we make positive changes with our finances. Unfortunately, many of us get motivated, and then lose hope when the enormity of planning for finances starts to set in. Here are 3 steps that you can take to help your financial goals not fizzle in 2019:

  • Step 1 - Build a budget:

 Thanks to technology this is getting easier and easier to do. Helpful software can help you build a budget and track your expenses in minutes. After you have your spending history defined challenge yourself to find expenses that can be decreased this year. Our firm encourages clients to track their actual spending vs. budget goals on a monthly basis to stay informed. Having a time on your calendar each month to review your spending will help keep you on track in 2019.

Tip: In my experience savings can often be found in these budget categories: dining out, insurance premiums, cable, and cell phone bills. Try to see if you can find savings in one of these categories.

  • Step 2 - Build an Emergency Reserve:

Now that you have a budget, we have some very powerful numbers to help us with our next goal of building a safety net of cash for life's emergencies. The more specific we can get with this goal the better. Our firm typically uses client’s monthly expenses to determine how much liquid cash they should have set aside for rainy days. Here are some rules of thumb we use when defining an emergency reserve goal:

  • Early Career (21-39 years): Multiply monthly expenses x 3
  • Mid-Career (40-59): Multiple monthly expenses x 6
  • Late Career (60+): Multiply monthly expenses x 12

There will always be exceptions to these relatively simple rules, but don't get stuck in the weeds. Define your emergency reserve number and use some of the money you saved in step 1 to get started!

Tip: Keep these funds separate from the bank where your daily checking account is held. I like online savings accounts like Capital One 360, Ally, Discover, etc. for the higher interest they typically pay compared to most brick and mortar banks and credit unions.

  • Step 3 - Save For Retirement:

As a rule of thumb our firm encourages individuals to save at minimum 15% of their income towards retirement goals. This number can seem daunting for those who have not yet started, but the pay off in later years can be huge! Luckily, you may have access to save through an employer 401k retirement plan. If you don’t, consult with us to help you identify the best way to save for retirement.

Tip: If your employer offers a match, set a goal of contributing the max.

Don't let the confusion of picking your investments stop you from starting. Your employer 401k plan may have programs designed to help you simplify the 401k process. In addition, your financial advisors also have programs designed to help get started. You will thank your future self!

"But what about saving for college for my kids, paying off debt, building an estate plan, getting life insurance, and all the other questions I have about my finances" you ask? These are all very important considerations, but you have to start somewhere. 

If the thought of doing this on your own seems overwhelming don’t worry! Your employer offers financial professionals to you via the financial planning benefit program at no cost to you.


About the Author

As Co-Founder of Blakely Walters, Sloan Walters strives to provide clients with the highest level of financial advice, education, and experience. Since establishing the firm, Sloan has been able to help clients enhance their financial independence across a comprehensive menu of services. His firm provides comprehensive financial planning and counseling services to individuals and companies across the united states and from all walks of life. In addition to his oversight of the firm and its many strategic partnerships, Sloan is a respected guest speaker across a spectrum of financial topics.

*Securities and Investment Advisory Services offered through NEXT Financial Group Inc., member FINRA and SIPC. Blakely Walters is not an affiliate of NEXT Financial Group Inc.  Neither NEXT Financial Group Inc. nor its representatives give tax or legal advice