With each new year comes the opportunity for new intentions, resolutions and goals.  Basically, the opportunity to leave bad habits behind and start anew!  In much of our coaching work, we encourage clients to think about what the want to accomplish in 4 key areas of life: Personal, Professional, Spiritual and Financial. 

The financial bucket tends to elicit the most visceral responses – mainly those of uncertainty, doubt, intimidation or trepidation.  So, we’ve compiled a checklist for you of 6 items to guide you to toward a healthy and financially rewarding 2022.  What’s even better is that this can be referenced year over year and thought of almost as your Financial Check-Up!

1. Create Your Personal Financial Inventory

This is important because it gives you a baseline understanding to the health of your bottom line. 

Things it should include:

  • A list of assets, including items such as your emergency fund, retirement accounts, other investment and savings accounts, real estate equity, education savings and any other valuable personal items (jewelry, art, etc)
  • A list of debts, including your mortgage, student loans, car loans credit cards, and other loans.
  • A calculation of your credit utilization raio, which is the amount of debt you have versus your total credit limit (good range = < 30%)
  • Your credit report and score

Basically, we’re trying to create your personal net worth statement. Find a template here.

2. Set Financial Goals for the Year and Beyond

Once you have your personal net worth and inventory created you’re able to analyze your current financial state and set goals for the future. 

If you struggle doing this a good question to ask yourself is, “If I am sitting down one year from today, what would have to happen personally, professionally and financially for me to consider that year a success?”  You should ask that question for 1, 5 and 10 year time frames. 

Here are some examples of what goals may look like:

Short Term Goals:

  • Establish and commit to a spending plan. Get our budget worksheet here.
  • Create an emergency fund or increase your emergency fund savings
  • Pay off credit cards
  • Ask for a raise or promotion

Mid-Term Goals:

  • Getting life insurance and disability insurance
  • Buying first home or vacation home, renovating or moving
  • Launching that business you’ve been dreaming of
  • Increasing contributions to 401(k) or investment accounts
  • Tax planning

Long-Term Goals:

  • At what age do you want to be financially independent
  • How do you want to exit your business
  • What kind of travel is on your bucket list
  • Thinking about what type of inheritance do you want to leave

3. Update Beneficiaries & Audit Estate Plan

This is an often overlooked yet very important piece to a bullet proof financial plan.  Life changes quickly so ask yourself if any of the following have occurred in your life over the last year:

  • Changed jobs
  • Earned partnership/equity in a business
  • Bought real estate
  • Got married/divorced/widowed
  • Had a baby
  • Received an inheritance
  • Retired

If so, check on and update the following:

  • Life insurance beneficiaries
  • Update Estate Plans
  • Update Trustees
  • Update investment account beneficiaries
  • Update Power of Attorney or Payable on Death

4. Review Your Investments

It is important that you take stock of where your investments are and how they’re allocated, especially whenever the economy undergoes major shifts like we’ve seen over the last couple of years.  Here’s a list of talking points to review with your advisor:

  • Check in on your risk tolerance and asset allocation
  • Rebalance your portfolio
  • Evaluate your 401(k) investment selections and determine if adding Roth contributions makes sense
  • Check for old 401(k) accounts from previous employers and roll over to an IRA
  • Determine if you can increase contributions to investment accounts

5. Update your Financial Emergency Plan

As we’ve all learned over the last 2 years, a sizable emergency fund if helpful when financial trouble descends.  But, besides liquidity, take a look at your broader emergency plan:

  • If you don’t have 3-6 months’ worth of expenses tucked away, building your emergency savings should be a top priority
  • Invest in insurance: are you covered for a temporary disability, for example
  • Make sure you have a financial and medical power of attorney

6. Work on Building Alternative Income Streams

Building multiple income streams gives you options, options give you financial certainty…some examples:

  • Investing in rental property
  • Maximizing social security benefits
  • Building cash value in your life insurance to create a non-market correlated asset income stream
  • Annuities
  • Dividend paying stocks or private equity placements with strong cash flow

We’re all looking forward to 2022 with hope and optimism!  Don’t let a lack of financial self-confidence hold you back from accomplishing everything you want.  

Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC (www.SIPC.org). Gambin Financial Group is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies. Supervisory Office 5001 Louise Drive, Suite 300 Mechanicsburg, PA 17055, 717-791-3300.

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