It’s that time of year again! We look back on last year and see what we can improve upon this year. Financial resolutions are often one of highest priorities on many peoples lists of resolutions, the idea of “spend less, save more” promises that never seem to make it past the first few months. Here are a few easy steps to get your finances on track for 2017.
Budgeting is one of the most important items to start your financial plan with, as it gives you a visual of the flow of your income. Monitoring your income and expenses can help you increase your net worth.
1. Begin with creating a realistic savings goal for each month. Ensure that this strategy will work for you.
2. With help from a financial planner, determine how much you will be expected to save in order to meet those goals (Retirement, House down payment, College Education).
I encourage putting away a minimum of 10% of your gross pay into your investment accounts (including retirement & medium term accounts.) Ideally, being able to save 20%-30% of your gross pay is an excellent goal to have.
Emergency Fund & Making Your Savings Work Harder for You
Depending on your profession, you should have anywhere from 3 to 6 months of emergency expenses in your bank account at all times. This allows for you to have access to cash immediately in case an unforeseen event occurs, and you will not have to tap into your investments. Once you have enough saved, it is important to get that excess money to work hard for you. You work hard for your money, it’s time for your money to work hard for you by not leaving it earning pennies in the bank. If you were to leave your excess money in the bank you will be actually losing out to inflation over time.
Look at Your Investment Accounts & Consolidation
The beginning of the year, it is a great time to look at your overall investments and ensure they are still aligned with your overall strategy to achieve your financial goals. This is a perfect time to work with a professional investment advisor to help determine your risk tolerance and run projections to make sure your still on track for your goals in life.
Americans are changing jobs more often than they have in the past, and this can result in multiple investment accounts and a headache to remember all of them. It is not uncommon for someone to have several 401(k) plan accounts with former employers. Once the number of accounts you have has been reduced, it may be easier to make changes, coordinate your overall asset allocation, and track performance.
Review Your Life Insurance Needs
The most important thing you can do is to make sure your family is fully protected in case a traumatic event occurs. This includes making sure you have the proper life, health, disability, and long-term care policies in place for protection. Even if you already have these plans set up, it’s important to review them with your advisor to make sure they still fit your current situation. The last thing you want to do is build up your assets over many years, only to see them deplete in a matter of days from an unforeseen accident. Working with a financial planner to calculate your exact insurance needs can ensure you have the appropriate plans and amounts of coverage to safeguard your family against a rainy day.
Being on top of your finances this year will allow you to have peace of mind that you’re on the right track to pursue your financial goals and financial freedom. It starts with a simple budget and holding yourself accountable. This is why it’s so important to have a financial planner on your team to be there every step of the way through your life.
By Nick Licouris
Investor Advisor Representative
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.
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