Happy New Year!

The beginning of the year is a great time to start afresh and work on some financial resolutions.

Here are some ideas for 2021 to get you started:

1. Commit to a spending plan

Let us not talk about that dreaded word ‘budget’. Any financial expert will tell you to live within your means and create a budget. What you really want to know is how much you can spend. How do you really prioritize what you need to and can spend on? Start with tracking your expenses by pulling up your bank and credit card statements, and downloading them to a spreadsheet to sort through. You can view your spending and come up with a plan to eliminate excessive expenses. Mint and other apps also offer an automated way to track your expenses, but when you are diving into a spreadsheet and manually moving and changing things around, it can be easier to really grasp your spending habits. Once you know your fixed and variable expenses it will be easier to manage.

2. Start investing or stay invested

Once you are on stable financial footing start investing as you want to take advantage of higher yields compared to keeping cash in a savings or checking account which is currently earning less than 1% APY. The stock market has historically yielded 5-10% per year. Investing is like holding a yo-yo and walking up a hill. There will be fluctuations, but thanks to compound interest, in the end, you are still going up. Market shaking events are a part of life. Let us take the last fifteen years. We have had the Financial Crisis of 2008, the subsequent Great Recession, and then the 2020 pandemic. Just look at the chart below. The annualized return of the S&P 500 over the last ten years is 11.3%. Of course, when creating your investing plan there are several variables to consider such as your capacity and willingness to take risk, your time horizon, short- and long-term goals (buying a house, paying for a wedding, getting a pet), which investment accounts to use, how to minimize taxes. A financial advisor can help you through it all.

Source:spglobal.com

3. Refinance your mortgage or student loan while interest rates are low

Federal student loans are currently on forbearance until the end of January and other creditors are being more lenient. Consider renegotiating leases, payment terms, and interest rates. Historically low interest rates may qualify you for a lower-rate mortgage or student loan, freeing up some cash that can be used for savings or investing.

4. Start or build your emergency fun

If you did not think it was important before, COVID-19 should have made an emergency fund look like a great idea. Establishing an emergency fund has been brushed aside by many people for years, as events such as losing a job, falling ill, earning less, caring for a loved one, seemed to be situations that would never apply to them. Before you even have conversations about how much money to set aside for college or retirement, the conversation to have this year is do we have enough money set aside for emergencies. Remember an emergency fund is designed to cover your essential expenses for three to 12 months of expenses, depending on your personal circumstances.

5. Track your net worth

Net worth is a snapshot in time to figure out where you are at. To calculate your net worth, you take the value of your assets minus liabilities. This can be calculated by pencil or pen, a spreadsheet, or using apps like Mint or Personal Capital where you can link all your accounts, or if you are our client you can use your client portal. When you know the answer, do not be discouraged by what you see. By tracking it over time you will be able to track the ups and downs and feel more on top of your finances. This should only take a few minutes and will be a great assessment of your financial wellness over time.

An advisor can help you see your blind spots and guide you through the complexities in your life.

Adviso Wealth is dedicated to working with people just like you. We want to give you the clarity and confidence you need to achieve your personal and financial goals.

To learn more, visit advisowealth.com or email sweta@demo.advisowealth.com