It’s still January, so it’s not too late to start planning your financial moves for the rest of the year. If you’re not sure where to begin, you might want to take a cue from the ultra-rich.
Making a Plan
The ultra-rich create a plan for their money each year — and you should, too.
“Know where you are and where you are going,” said H. Jeffery Spivack, CFP, VP of financial planning operations at Citizens. “Your financial plan should include updated net worth statements, including all your assets, their values and liabilities. These net worth statements should include ownership details, locations for ownership proofs and details about beneficiaries.
“Your plan should also include a detailed cash flow statement with an updated budget,” he continued. “These will point out times of surplus/deficiencies so you can plan for each. Further, using the cash flow and budget will allow for the discovery and elimination or reduction of unnecessary accounts, bills, subscriptions and other expenses. The potential savings might allow you to invest more.
“Last, your financial plan should detail what will happen at the end of the plan, making sure that your wishes are met and that your family will receive assets in proper order and with the least fuss and expense.”
Seeking Out Professional Advice
Even if you’re not a millionaire, it can be very helpful to get professional financial advice.
“You don’t know what you don’t know, and that’s why getting strong financial advice is crucial to keeping your 2024 resolutions,” Spivack said. “Engaging an objective expert like a financial advisor will ensure all your bases are covered. And don’t forget to go through an insurance audit with your advisor to make sure you have the proper coverages.”
Maxing Out Retirement Savings
The ultra-rich will be maxing out their retirement savings accounts — and this is a smart idea for anyone of any income level.
“If you ever plan on retiring, contributing to a 401(k) or a Roth IRA is a priority,” Spivack said. “As we say, the day you start earning money, you should immediately start contributing to allocate the most money for retirement. By putting money into a 401(k) and/or Roth IRA, your money is passively making you money without you needing to touch it. Without contributing, you’re losing money throughout the years you’re working, which will cause much frustration at 65.”
Reevaluating Investments
The beginning of the year is a great time to double-check that your investments are still in line with your goals.
“A thoughtful investment strategy is essential to building wealth,” Spivack said. “Consider your collective risk tolerance and whether your investment portfolio needs to be adjusted, either strategically or tactically. Your risk tolerance can change over time based on various factors, and underlying investment asset classes should be revisited to ensure their place in your overall strategy. Your strategy needs time to work, so implement an investment plan as soon as possible and review it regularly.”
