5 Ways to Monitor Your Financial Goals

It’s the new year and along with that comes resolutions and lots of good intentions. The biggest question is, how do you hold yourself accountable to the financial goals you’ve set? If only it were as easy as saying “I’ll save more and spend less.” However, we know that financial success doesn’t happen without discipline and effort.

1. To reach any goal, you need a plan.

A good plan is always documented. That plan allows for flexibility and must be followed up on throughout the year or specified time period to ensure it is properly working. Let’s dive in…We all want to save more and spend less, but how does that happen? Such a broad statement rarely leads to financial success without the specific steps laid out. Ideally, engaging with a fiduciary financial advisor is the best way to formalize your long-term financial goals into an actionable plan. However, you can certainly get started on your own.

2. Understand where you are.

The first step is to assess where you currently stand. List all your assets in one column and your liabilities (debts) in another. The difference, hopefully positive, is your net worth. If your networth is negative, your priority needs to be a debt reduction plan, paying off your highest interest rate loans first. Your net worth is a good tracking point for your financial wellness. Networth fluctuates with the stock market and the real estate market. These are areas where you have little to no control, so don’t beat yourself up over declines outside of your purview.

3. Monitor income and expenses.

On a monthly basis, you can monitor your income and expenses. Yes, income. Is your salary keeping pace with inflation and the job market? Recent research shows that annual merit increases have been outpaced by workers who have switched companies to seek out a bigger paycheck. Don’t become complacent with your salary. Research what you can command on the open market. On the expense side, examine your outflows from month to month but don’t get bogged down in the details. Look for trends rather than focusing on exact dollar amounts. Has your entertainment or travel budget crept up? Have introductory promotions ended and your subscriptions and/or utilities now are more expensive? Take 15 minutes a month to look at the overall picture and fix anything out of line. On a semi-annual basis, check in on your savings levels.

4. Invest your money.

If you find that you have excess cash left at the end of every month, bump up your contribution level in your 401(k). If you’re already maxing it out, consider setting up an automation contribution to a brokerage account. At a bare minimum, contribute enough to your 401(k) to receive the employer match (“free money!”). If you make contributions to a Roth IRA, consider making those earlier in the year instead of waiting until the last minute. On an annual basis, examine your investment allocation. Your allocation (mix of stocks and bonds) represents the amount of risk your portfolio carries. Ideally, this has been chosen in conjunction with your financial plan in order to meet your long-term financial goals. It is critical to rebalance your portfolio back to these targets on a regular basis to maintain your chosen risk tolerance.

5. Be on top of your finances.

In addition to investments, check your beneficiary designations on your retirement accounts and life insurance policies. Make sure they are up to date and in sync with the intent of your overall estate plan. Make a call to your insurance agent to review coverage on your home, auto, and other property to make sure risk is mitigated. Your CPA also needs to be kept in the loop. Taxes are not just data in and data out, so ask if there are any strategies to reduce your tax liability or any new tax laws. The key is to stay tuned in to your financial picture while not overreacting. You can’t change the stock market, but you can put yourself in the best place to reap the long-term benefits of a diversified investor. Furthermore, wealth accumulation doesn’t happen without effort. A relationship with a fiduciary financial advisor can help give you that added nudge to help you stay on track.

Have more questions? Contact Us

Missie Beach, CFP®, CDFA®
Senior Financial Advisor

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By Published On: January 11, 2023

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