With everything going on in your life, why do you make time for your annual physical? Maybe your insurance covers it. Maybe you want to ensure you are in good physical shape and catch any potential problems early. I believe the same can be said for your financial health. To ensure you are in good financial condition and stay that way, you must take time for an annual financial review with a professional.
Let’s review three tips I’ve provided before to help you reset your finances in 2022: review your tax withholding, look at all your expenditures, and update or begin a retirement savings plan. Here, I want to offer you three additional items you should discuss with a financial professional. These topics may not seem financially related at first glance, but I assure you they should be the foundation upon which you build your financial plan.
WHAT IS IMPORTANT TO YOU?
What is most important to you; what do you value most? Impulse spending? Being debt-free? Purchasing your dream home? Leisure activities, boating, golf, shopping, and family vacations? Supporting your favorite charity? Setting aside money for your children or grandchildren? Have a large retirement savings account? Your financial legacy? I encourage you to make a list of what matters to you. Discuss your list with your financial professional. This information will help him or her offer recommendations based on your priorities.
WHAT ARE YOUR GOALS?
Now that you have defined what is important to you, you can start setting goals in each of those areas. Review your budget, or develop one if you don’t have one, and make necessary adjustments so your money is used in a way that’s consistent with what you value.
Remember that budget realignment is not always easy to accomplish. Don’t beat yourself up for your past spending and current debt. Instead, forgive yourself for any bad choices, and choose to discipline yourself going forward so you can accomplish your goals. You understand when you set a goal for physical health that it will take time to reach your goal; reaching your financial goals will also require time and self-discipline.
WHAT KIND OF LEGACY DO YOU WANT TO LEAVE?
I find that people often overlook their financial life legacy. Maybe you consider yourself just an average person doing the best you can with the life you’ve been dealt. Maybe you believe only “rich” people can leave a legacy; after all, the general definition of legacy includes money, property, or possessions left behind when you die.
I prefer to extend the standard financial legacy definition to include a financial life legacy. I believe every person leaves behind a financial life legacy, good or bad. This legacy is more than whether or not you leave behind a lump sum and includes how you viewed and handled money. Did you live paycheck to paycheck? Were you a spendthrift? Were you tightfisted or generous? Were you consumed with making more money or content with what you had? Did you pay your bills on time or teach your children how to work the system? Did you manage your money, or did it manage you? The answers to these questions tell you what your financial life legacy will be.
The good news is that while there is breath in your body, there is hope. You can choose to discipline yourself and begin to move toward financial health. Make the time for a review of your financial health. You will be glad you did.