Friday, April 30, 2021
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This is 2020. If you don’t have a financial plan you are executing already, it time to get one. Create your financial plan and allow your account to flourish.

If you are lacking inspiration on how to set up your plan, peruse this checklist. The steps here are a must-do for every financial plan.

1. Rebalance

With this, we are referring to your investment accounts. The volatility of 2019’s market might have knocked your asset allocation off course. If so, this is the tire to redress the situation.

Check your weightings in asset classes against your financial plan. Your asset classes like stocks and bonds and your asset categories like the foreign stock and US stocks should be in line with your plan.

Reallocate securities from areas where you’re overweighted to areal that are not performing as they should.

2. Review investment plan

Your asset allocation must at all times be consistent with your financial plans. If there is an upset in the balance, review your investment plan. Many factors might change your financial plan. Retirement, old age, risk factors are determinants that could influence a change in your financial plan. If there is a shift in your financial plan, you have to address the shift by updating your allocations.

3. Prepare or update beneficiary designations

This designation must always stay updated. This is because your beneficiary designations will always trump names in the will you create. Be sure that your bank accounts, annuities, and insurance policies designation form all have the same beneficiary which is the person that you want. This is a very important financial planning step.

4. Create or update a will

Creating a will early in life is a challenge for most people. As it is seen as a controversial decision to make, a lot of people shy away from it. However, you can’t really predict your time of death so, to save your loved ones from conflict after you pass away, transfer your estate properly. Create a will. Clearly spell out your will and let your heirs know what you leave to each person.

5. Make or update end-of-life documents

If you have no idea what your end-of-life- documents include, these are your health care proxy, living will, and financial power of attorney.

Still confused about what these documents mean to you? Let’s break it down for you.

A health care proxy is a document designed to help you appoint a person who will make decisions regarding your health care at a time you are unable to.

With a living will, you can express your wishes regarding steps you want taken or not regarding medical care and end-of-life decisions.

A financial power of attorney document is directed to the only person you choose to have the authority to handle your finances at a time that you are unable to do so.

6. Retirement Account Contributions

The earlier you start your retirement savings, the lower the percentage of your income you will dedicate towards it. Starting early in your 20s might get your rate as low as 10%. If however, you’re starting in your late 30s and 40s, the percentage of your salary you dedicate to your retirement savings could be as high as 20%.

7. Work Contribution

This is a key step in financial planning. You can avoid leaving money on the table and ensure a pay raise by contributing enough in a bid to ensure that you are receiving the largest contribution your employer could possibly offer to match your contributions.

8. Know What RMD Means

Take annual RMD. After your first RMD, you must take each subsequent year’s RMD by Dec. 31 of that same year, not by April 1 of the following year. For folks that will be clocking 70 in 2019, you might want to make your RMD withdrawal sooner rather than later. This is because doing so could subject it to a lower tax rate.  

9. Never Use Debt To Finance a Lifestyle

Constantly borrowing money to finance an hour’s lifestyle will ensure that you have little or no money left to invest. If you want to borrow money, borrow only to invest.

This is 2019. Financial education is very important. Learn more about stocks, bonds and other forms of investment.

10. Take Advantage of Financial Freebies

Look for plans that offer you financial benefits and explore them. For instance, if there’s a company pension plan, ensure you participate. Contribute to an IRA account to save up on taxes.

These steps are compiled as a checklist that you must go through when embarking on your 2019 financial plan. Exploit each step to steer your finances towards your goals and targets.

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