Health & Wealth

With year-end approaching, you may be assessing the year that has past and the year that is yet to come. If you’re like me, you are considering and analyzing what you can improve upon for the new year. Two important components of your life that you may be analyzing are your health and wealth. Health and wealth are two topics, that if you do not attend to, the repercussions will ultimately catch up to you and potentially affect you in a negative way. Although we are not medical experts, we do have a considerate amount of experience in personal finance, or wealth management, which is what we will cover in our newsletter this month. Below is a list of some core personal financial guidelines that people of all ages can apply to improve the financial quality of their lives in most cases. Maybe consider implementing some or all of these principles in the new year:

1. Live within your means: This guideline is a simple one, spend less than what you make, and be mindful of life style creep. If you can live within your means, then you will provide yourself with more financial flexibility and ultimately more money to save. As you progress through life, you may begin to earn more money, be aware of the style creep in your lifestyle expenses, which is a tendency to spend more as you make more.

2. Get rid of bad debt; Prioritize paying off high interest debt: Throughout most peoples’ lives they will use some form of debt. Not all debt is created equal. Debt that is used to acquire an asset that has the chance to appreciate, may be considered good debt. However, debt that was used to pay for discretionary spending, like credit card debt for travel and leisure activities, is not good debt, particularly when it is carried forward from one monthly statement to the next. Prioritize paying off bad debt, especially bad debt with high interest rates like credit card debt, and even student loans. If you would like to research more on this topic, consider reading our article on the topic, here.

3. Pay Yourself First: This is another way of saying, save. Prioritize your savings first, then pay your expenses, and whatever is leftover should be considered your spending money. We wrote an article about this topic, consider reading it here.

4. Use Retirement Accounts: Retirement accounts provide individuals some of the most powerful savings vehicles available. The earlier an individual begins to contribute to retirement account(s), the better, because those investments have a longer time to grow and normally are not taxed until the funds are withdrawn, which is usually during retirement years. Employer sponsored retirement accounts that provide matching contributions are especially beneficial, because the employer match is essentially free money.

5. Plan: This is more of a general principle than a specific financial principle. In addition to planning what you may have for dinner tomorrow night, you should be actively planning about such things as: how much money do you need to retire, future tax liabilities, insurance needs, children educational accounts, amongst many other personal financial topics. It is important that you strategize for the future and effectively plan for those responsibilities today. If you are having trouble doing this, consider consulting someone you trust or a financial professional. There are professionals known as Certified Financial Planners (CFP), that specialize in helping people plan financially, and many Certified Public Accountants (CPAs) that can help.

6. Set Financial Goals: Setting goals for yourself can be a very powerful mental tool. The hardest part is developing and setting the goals you would like to achieve. At the end of each year, I like to write down my goals for next year, five years, and ten years down the road. For each time frame I set personal goals and professional goals. If you have never done this exercise for yourself, I would recommend starting with small goals and once those are completed, the momentum from achieving those goals should snowball into large goals and hopefully accomplishments. Check out our article on the topic, here.

The new year provides us a great opportunity to assess and possibly reset some of our habits. Year-end is as good a time as any to begin assessing what you may want to change in the new year. I hope these guidelines are able to assist you in improving your financial situation. If you have any questions about the guidelines mentioned above, please contact us.