discussing your financial plan with financial advisor
discussing your financial plan with financial advisor

10 things you should be doing with your financial plan

In our last economic update webinar, we discussed the hot topics of inflation, market swings, and what’s ahead for our economy. We also covered ways to protect your savings and how to invest in uncertain times, which resulted in a list of ten things you should be doing with your financial plan. Review these items and determine whether there are areas you could improve. We would be happy to help you implement this advice. 

Watch the full webinar here. 

#1 Cash flow and budgeting

A lack of cash flow is the number one reason businesses fail and is a problem that more than half of small businesses struggle with. In business and personal finances, one of the best ways to stay in the black is to create (and stick to) a budget. According to a recent report, the number of Americans living paycheck to paycheck is increasing. When funds are tight, effective budgeting can help you prepare financially for your needs, relieve the stress of uncertain times, and provide support in reaching your goals. 

Read more: 7 tips to manage your small business cash flow 

Aside from retirement savings and investments, a crucial element of any budget is setting money aside for a contingency or emergency fund. You never know when an unexpected event (like a global lockdown!) will have a major financial impact. When unforeseen circumstances arise, you don’t want to find yourself accumulating debt to cover your necessary expenses.

#2 Review your overall financial plan

It’s essential to remain active in the financial planning process. The beginning of the year is a good time to review your overall financial plan to ensure it meets your current needs and that you’re on track to achieve your financial goals. In your review, revisit your net worth statement and update the summary of your assets and liabilities. Better yet, build a relationship with a Personal Financial Specialist (PFS), who can assist you in this process.

When looking for a PFS, review our list of things a financial planner isn’t and shouldn’t be.

#3 Risk management and insurance 

If you can’t afford to replace it, insure it. But first, you’ll need to identify where you’re at risk. Your risk management strategy should protect you against fraud, waste, crime, acts of God, liability, and any other risks you could potentially encounter in your unique circumstances.

#4 Retirement planning

Retirement in a sentence: spend less than you make and save money consistently! The sooner you start investing and saving for your retirement, the more time your money has to grow. Even if it’s a small percentage of your salary, starting early will mean maximum payoff further down the road. Despite rising inflation and cost of living, it’s crucial to contribute to your retirement consistently, even if you are forced to reduce the amount until you’re in a better financial position. 

#5 Investment planning

Whether you’re aiming to become a millionaire or billionaire, it’s vital to keep your goals front and center. Regardless of when you start investing, consistency is key. Markets fluctuate, which is why investing is a long-term strategy. Even during turbulent times, you need to keep your eye on the prize and stick to your plan in spite of dramatic market swings. To coordinate your risk, it’s crucial to curate a diverse portfolio, spanning the national and global markets, commodities, and real estate investments

#6 Tax planning

An effective tax plan can help you boost your tax efficiency, offset your tax burden, and help you reduce your overall tax bill. By forecasting your tax liabilities ahead of time, you’ll be able to identify strategies to reduce your future taxes and take advantage of the credits and deductions available to you. 

Remember that, especially in uncertain times, tax laws undergo various changes every year, so it’s important to stay informed about newly-implemented or expiring laws or newly-implemented laws so that you can leverage the changes.

Read more about reducing your business tax liability with year-end tax planning. 

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#7 Estate planning

While the topic of estate planning can sometimes be somber, getting your estate in order and making sure your last wishes are known will help prevent unnecessary confusion or family squabbles and reduce your loved ones’ tax burden. Your estate plan will involve different aspects depending on your family situation and the generations involved. 

A few things to review: 

  • Family office operations 
  • Beneficiaries
  • Insurance policies
  • Wills
  • Living trust
  • Power of attorney
  • Advance care directive

Read more: 7 factors to consider in your estate planning

#8 Charitable planning

How are you planning to maximize the tax benefits of charitable giving? We recommend looking into donor-advised funds—accounts that are maintained and operated by a section 501(c)(3) organization. You can give money or assets to a nonprofit sponsor to then be disbursed to various charitable organizations over time, leading to significant tax advantages. 

#9 Education planning

If you have children or are planning to become a student yourself, the number one question is: how will you pay for college? Most college students need to rely on student loans, but it’s important to do exhaustive research on all the available options to help reduce your debt burden. If appropriate, look into opening and contributing to a 529 college savings plan, a tax-advantaged account specifically designed to help pay for qualified costs associated with higher education.

#10 Debt reduction

The first step in most financial strategies is reducing short-term debt. As part of the budgeting process, you need to determine how much you can devote to debt reduction. This may involve lowering your expenses to give you more discretionary money to put toward this goal. Once your short-term debt has been quashed, you can implement an effective strategy for reducing long-term debts, balancing this with consistently contributing to your investments and savings. 

Put your financial planning in good hands

At FSA, we offer comprehensive financial solutions designed to meet your unique needs and help you achieve your financial goals. Contact us to schedule a consultation.

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