12 Steps to Financial Fitness

It’s a new year and a chance for a fresh start.  While you’re busy tackling your resolutions, like organizing your closet or hitting the gym with renewed fervor, why not take a moment to consider your financial life?  Are you financially fit and prepared for the future?  If you’re unsure, but ready to whip your finances into shape, we’ve provided twelve key steps to help you get started.

Step 1: Write Down Your Goals

Putting your goals and dreams in writing makes them real. Create a list of the big things you want in life—travel, your own business, a vacation home, early retirement—and use the list as a starting point for the small steps you must take to reach them.

Step 2: Record Keeping

Organize home files and pull together your tax records.  Talk to your advisors about which records to keep and for how long.  Think of home record-keeping storage and filing in terms of disaster planning and estate planning. If you feel overwhelmed, think about hiring a professional organizer.

Step 3: Retirement Planning

Talk to your advisor about additional IRA contribution before the tax deadline. Analyze your portfolio for suitability and diversification. Are you contributing as much as you can? What are your IRA rollover options? If you are self-employed, review compliance requirements and vendors for performance.

Step 4: Focus on Tax Planning

Move beyond your annual tax return to a more formal tax planning and retirement strategy that will result in minimizing tax impact and increasing financial freedom in retirement. Sit down with a financial planning professional to discuss your current financial situation and how to improve it.

Step 5: Budgeting and Spending

If you want to save more and spend less, you need a budget. Determine personal savings goals and figure out if you have enough to go around each month to meet that goal. Automatic transfers are a great option for both liquid savings and retirement. If you are retired, review your distribution strategies and withdrawal rates.

Step 6: Increase Savings – Pay Yourself First

Resolve to save at least 5 to 10 percent of your take-home pay as you’re able to afford it, and choose the maximum contributions for which you qualify in your various retirement vehicles. If you haven’t signed up for your employer’s retirement plan, do it this year.

Step 7: Plan for Life Changes

If you are planning a career change, starting a business, moving or having a baby, these major life decisions should be considered from a financial perspective. Talk to your financial advisor about how to structure your income, savings and lifestyle to meet a new life stage.

Step 8: Create an Investment Policy Statement (IPS)

An IPS serves as a roadmap and report card for investment decisions.  It helps you and your financial advisor make the proper decisions on investments to leverage your resources wisely and meet your goals. Learn more by visiting our website.

Step 9: Invest in Yourself

Additional training or another degree could increase your future income.  Find the right 529 College Savings Plan for your children or grandchildren. If college is around the corner, reposition assets into retirement plans and other exempt assets as appropriate. The Free Application for Financial Student Aid (FAFSA) is due shortly after the first of the year.

Step 10: Review Your Coverage

Each year, review all insurance policies to see if you have adequate or surplus coverage, whether you could consolidate some coverage under the same carrier for a bulk discount, or if you could find less expensive coverage elsewhere.

Step 11: Estate Planning

In addition to tax-saving strategies, estate planning can help you get your financial affairs in order and leave a legacy. Review your investments to determine if you are doing all you can to maximize returns and protect your assets.

Step 12: Grade Your Financial Advisor

How well have your financial representatives served you this year? Have they approached your investments proactively or simply responded to your requests or questions?  Do you know what fees you are paying? Set a meeting with your financial advisor to discuss investment strategies, IPS (see step 8), ties to investment products and level of fee transparency.

Wipfli Financial Advisors, LLC (“Wipfli Financial”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC); however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Wipfli Financial is a proud affiliate of Wipfli LLP, a national accounting and consulting firm. Information pertaining to Wipfli Financial’s management, operations, services, fees and conflicts of interest is set forth in Wipfli Financial’s current Form ADV Part 2A brochure and Form CRS, copies of which are available from Wipfli Financial upon request at no cost or at www.adviserinfo.sec.gov. Wipfli Financial does not provide tax, accounting or legal services. The views expressed by the author are the author’s alone and do not necessarily represent the views of Wipfli Financial or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Wipfli Financial, and Wipfli Financial does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Wipfli Financial of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
OneBite Editorial Staff

OneBite® is a Top 50 Financial Advisor Blog powered by Wipfli Financial Advisors. Founded in 2011, the digital magazine is dedicated to providing intelligent, in-depth coverage and analysis of the top financial and economic issues facing investors today.

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12 Steps to Financial Fitness

time to read: 3 min