Reflections

By Sean Condon, CFP^®

If you are a bit wary of having high hopes for the new year after the intense years of 2020 and 2021, you are not alone.  With the ongoing pandemic, economic uncertainty, and a slow road back to “normal,” planning for 2024 might feel overwhelming.  The good news is that there are actionable steps you can implement to take back control of at least one important area of your life—your finances—and truly make 2024 a fresh start.  Here are four ways you can get started today.

1. Get Your Goals in Shape

The first way to jump-start your financial plan is revisit your financial goals.  Do you have a goal for your finances or are you just crossing your fingers and hoping you have enough for the lifestyle you want?

Specific goals with defined timelines will help to determine the best course of action, including how much risk you can and should take with your money.  For instance, if you are looking for a guaranteed source of income, then you will probably want to stick with investments that will provide long-term security.  Conversely, if you are looking for substantial growth, then you might want to take on more risk and invest less conservatively.  Every dollar in your portfolio should be working toward a specific goal.

Remember that the best goals will be SMART:

• Specific: The more you can identify exactly what you are saving for, the easier it will be to work toward it.
• Measurable: As much as possible, try to identify how much your financial goal will cost. Do the research to figure out what you need to save so that you are able to see tangible progress along the way.
• Attainable: Make sure your goal is realistic and achievable. This might require some self-reflection or reevaluation of your priorities.
• Relevant: Ask yourself which goals align with your core values. Remember that your finite assets will be split amongst your seemingly infinite list of wants.  The more you can scale back your list to what is truly relevant, the quicker you will be able to achieve each goal.
• Timely: Identify the timeline for each goal so that you can prioritize which ones need to be addressed first and how much risk you can afford to take.

2. Have your priorities changed during COVID?

Has your life changed significantly since the pandemic began?  Collectively we have all been through a challenging break from familiar roles and structures.  While individual experiences have been very different, with some much harder than others, we all might say life has become disturbingly different and confusingly like what it was before.

The experience has often been disturbing and disruptive, but it does give us a chance to reassess our priorities, including our finances.  Ask yourself, in the past two years:

• How have your priorities of how you want to spend your money shifted?

• How have your priorities of how you want to spend your time shifted?

The answer to these questions should have an impact on your financial plan.  After all, the point of financial planning is to understand where you are now financially and where you would like to be, and then follow steps to bridge that gap.  If your goals have changed, a good advisor can help give you solutions to make course corrections.  This will enable you to spend less time worrying about your money and more time focusing on what is important to you and your family.

3. Reevaluate the Risk in Your Portfolio

As mentioned in Step 1, risk is fundamental to investing.  Even “investing” by hiding cash under your mattress involves risk.  If inflation is rising, you are losing purchasing power on your assets when you earn nothing.  To jump start your financial plan in 2022, be sure to reevaluate the amount of risk you are taking in your overall portfolio.

It is not uncommon for a portfolio to become unbalanced as the market ebbs and flows.  What may have started out as a 60/40 allocation between stocks and bonds can easily become a 70/30 or 80/20 allocation, which is a significant difference in risk level.  You may also find that you are too heavily concentrated in one type of asset or in one company’s stock.  If this is the case for you, rebalancing and diversification should be explored.

Though risk is fundamental to investing, it is also crucial that you are not overexposed to unnecessary risks.  Take steps to evaluate your risk tolerance, based on your unique financial circumstances, stage of life, and personality, and be sure your investments align.

4. Partner with a Financial Professional

Regardless of where you are in the planning process or what goals you have set for your financial life, we are here to support you, guide you, and navigate any financial challenges you may face.  Partnering with a financial professional is a great way to take control of your finances and get a jump start on the future.

At Windgate Wealth Management, we have the tools and expertise to help you set financial goals, build up your emergency fund, and reevaluate your risk level.  If you are ready to start planning for the new year, reach out to us by calling (844) 377-4963 or emailing windgate@windgatewealth.com.  You can also book an appointment online here.