As you’re thinking about what you’d like to achieve in 2015, something to consider is your long-term financial future.
January is a time for pledging to make changes, so if you haven’t taken a hard look at how you’ll fund retirement, or even what you’d like your life to be like when you’re retired, now is a good time to put a plan together.
Smart Business spoke with Peggy M. Ruhlin, CEO of Budros, Ruhlin & Roe, Inc., to get tips on setting long-term financial goals.
What are some financial moves or considerations people should make at the beginning of the year?
There are a few financial resolutions to consider making as we enter 2015.
- Resolve to write down your financial goals. That’s called a goal planning statement, and its abbreviation, GPS, is intentional. Writing down goals is like using a GPS to find your way to your destination, but even the best GPS won’t work if it doesn’t know where you want to go. Determine the position you want to be in financially, when you want to be there, and what you want to accomplish once you’re there. That will give you the road map you need to achieve your goals.
- Resolve to pay yourself first. Instead of waiting to see if you have money left over at the end of the month, plan to pay yourself first. You could ask your employer to send a portion of each paycheck to a savings or investment account instead of your checking account. Paying off your credit cards is a simple way to save money in finance charges. Contribute the maximum amount to your 401(k) or retirement plan. It’s especially important to increase the contribution to get the maximum employer match, otherwise you’re throwing away free money. Also consider funding an IRA, and a 529 plan for your children’s or grandchildren’s education.
- Resolve to check your investments. Make sure your investments are still in line with your asset allocation and that that’s still appropriate given your financial circumstances and risk tolerance.
- Resolve to check your credit report. Get your free report at annualcreditreport.com and not one of the other so-called ‘free’ sites.
- Resolve to review your estate planning documents. Make sure your beneficiaries, durable power of attorney and health care directives still name the people you want making decisions in the event that you are struck by disability, serious illness or death.
- Resolve to talk with a wealth management professional if you need help setting long-term financial goals.
How often should people review their financial goals throughout the year?
Be cautious when reviewing your long-term financial plans too frequently. If you try to review your plan to see if it’s still feasible, it can give you an excuse to not do what you set out to do. We’re talking about a long-term plan, the success of which requires the fulfillment of many short-term goals. Unless you decide not to ever retire, it’s not likely that your long-term goals will change that much.
It’s wise to review your plan annually because new financial opportunities might arise during the course of a year. For instance, new tax savings opportunities could be come available through new legislation, new investment opportunities could be present that didn’t exist last year, your family circumstances might drastically change — birth of a child, marriage, death in the family — all of which could justify making adjustments. If nothing has changed, at least an annual review reminds you of what you’re working toward and the progress you’ve made so far.
Your long-term goals are personal, so it’s not up to someone else to set them for you. Professional wealth managers, however, can help you select the best tools and tactics to achieve your goals, especially if you’re having trouble or are ‘paralyzed’ when trying to set them yourself.
Insights Wealth Management is brought to you by Budros, Ruhlin & Roe, Inc.
