This is Part 2 of our series on financial topics to consider in the new year. If you missed Part 1 of this article, you can click the button below to read it.
In Part 1 we talked about the activation energy needed to sustain the momentum to actually reach your goals. Most people don't have enough energy to activate, so they fail.
We discussed the first topic to consider and why it's important: your values. Your values inform your goals, and your goals inform your cash flow.
Now we are going to look at the rest of the major areas of your financial plan.
The paradox with these topics is they require expertise to develop and implement the right strategies. However, they are easier to develop than are things such as your values and goals.
Asset and Debt Management
Start with the Basics:
Ensure you have enough cash reserves to handle unexpected expenses. Without sufficient liquidity, you risk depleting retirement accounts prematurely—a costly mistake involving penalties, taxes, and potential market losses.
A Financial Scorecard is a fantastic way to assess where you are so you can determine what you what or need to focus on.
Investment Management
Review whether your investments have become too conservative or aggressive over the last year and need to be rebalanced.
Check if any 401(k) funds need updating due to changes in fund options.
If you have non-qualified accounts, evaluate cost basis and opportunities for tax-loss harvesting or gain harvesting.
Tax Planning
They say the only things in life that are certain are death and taxes. But nobody ever said how MUCH you have to pay in taxes. If you are anything like I was for many years, when you look at your paystub the amount that goes to taxes is discouraging. Federal, state, and FICA taxes combine to give you a tax rate of 10% to 25% (if not more). Many people sigh and say “oh well” but it doesn’t have to be this way. It is very difficult to beat the IRS in any given year. However, if the right long-term tax strategy is implemented most people can beat the IRS at their own game over the long-term.
There are a myriad of ways and strategies that may be right for you when it comes to tax planning. If you are serious about reducing your taxes, my best recommendation (I know some of you will say this is self-serving) is to talk to your tax accountant or financial advisor.
Here are some strategies to consider in the new year...
Charitable giving strategies like Qualified Charitable Distributions (QCDs)
Roth conversions
Optimizing the timing of income streams
Where are you in the federal and state income tax brackets, capital gains brackets, IRMAA thresholds, etc.?
Do tax loss or tax gain harvesting make sense for you this year?
Insurance and Asset Protection
Evaluate your coverage for:
Life insurance. Do you have too much or too little?
Disability insurance. Do you have a personal policy or one through your employer?
Long-term care insurance. Not everyone needs long-term care insurance but everyone needs a long-term care plan.
Liability insurance. Do you have enough to protect your net worth?
Legal and Estate Planning
Estate Plan Checkup: Ensure documents like wills, trusts, and powers of attorney are up to date.
Beneficiary Review: Confirm your beneficiary designations align with your wishes.
Asset Titling: Retitle assets if necessary to ensure smooth transitions.
Are you in someone else's estate plan? Are you the POA or executor for your parents? When was the last time you reviewed their documents with them (pro tip, as much as your parents love you read their actual documents don't take their word for it).
A Final Thought
As we discussed in Part 1, momentum often falters when we don’t have the right tools or strategies in place to sustain it. Building a solid financial plan is like lighting a fire—it requires more than just paper to keep it burning. By focusing on your values and aligning your goals, cash flow, and strategies, you create the foundation for lasting success.
But even with the best preparation, navigating complex financial decisions can feel overwhelming. That’s where a skilled financial planner can make all the difference. With expert guidance, you can simplify the process, uncover hidden opportunities, and stay focused on what matters most to you.
If you’re ready to take the next step and see how we can support your financial journey, schedule a time to connect with us today!