7 Financial Planning Tips to Help You Meet Your 2020 Goals
Creating a financial plan can seem daunting, but the current world environment has proved that having a plan in place is more important than ever.
Whether you’re juggling a complex portfolio or entering a new stage of life, making sure your financial goals are incorporated in your wealth plan is key to achieving financial security. Uncertainties seem to be a constant in our current world state, but your financial security shouldn’t be one of them.
At Mercer Advisors, our holistic approach bundles financial planning, investment management advisory services, estate and tax planning all under one umbrella. By creating a comprehensive plan, you develop a roadmap to help you achieve your economic freedom.
Having a stable and well-rounded financial strategy is more than just a diversified investment portfolio. Here are our top seven tips for making the most out of your financial plan:
- Track your spending and develop a budget. By actively looking at how much you spend, it becomes easier to find areas to cut back on and therefore create additional wealth, the millionaire next door concept.
- Create a written financial plan. Sitting down and writing out a clear financial plan allows you to focus on the core three Ls: lifestyle, longevity, and legacy. You’ll consider how you spend your money currently, how you are prepared to stretch your dollar past retirement, and what protections you’ve put in place for the assets you’d like to leave behind – these are all key questions to address.
- Calculate your net worth. By calculating your net worth — documenting your assets and listing your liabilities — you are better able to see what your true net worth is, and how much is tied up in illiquid assets.
- Create or update your estate plan. Maintaining a current estate plan when life changes is critical for protecting your heirs. Having an estate plan can help reduce estate, gift, and income taxes, and in some states allows you to lower your property and inheritance taxes.
- Determine your investment strategy. Investment portfolios are probably the first thing to pop into your mind when a financial plan comes up. Applying a rigorous and scientific investment approach is key to maintaining your edge on a portfolio. We strongly suggest retaining a diversified portfolio to obtain superior risk-adjusted returns.
- Minimize taxes in your portfolio. A successful and holistic financial plan relies heavily on leveraging taxes to your benefit. By selling investments strategically, you can grow your assets while harvesting tax losses. No matter your current stage of life or current financial goals, taxes are one piece of the financial planning process that should take center stage. While many tend to think of taxes as a once-a-year filing requirement, we suggest clients proactively plan throughout the year to get the most out of their taxable benefits.
- Consider charitable giving. Another key tax strategy is using charitable giving to reduce your AGI (adjusted gross income). With the new CARES Act that went into place earlier this year, up to 100% of your charitable cash contribution is tax-deductible.