Last week, I shared five New Year’s resolutions to improve your financial situation. Today I share five more. My hope is that one or two of these resolutions will aid you in stewarding your resources in a more meaningful way.
6. Save for Retirement
Most people will reach a point in their lives in which they no longer have the health or desire to work for an income, and the sooner you can start to save for this the better. Generally, I’d recommend saving into retirement accounts in the following order:
1) Save the percentage into your work retirement plan—usually 401(k) or 403(b)—required to get the full employer match. This is free money that you don’t want to pass up.
2) Save the max into a Roth IRA. Savings into a Roth IRA are after-tax, but they grow tax-free and qualified withdrawals are tax-free. The maximum contribution is $6,000 in 2022 (and $7,000 if you are 50 or older).
3) Go back to your work retirement plan and contribute as much as you are able up to the max.
7. Make Sure Your Accounts are Properly Invested
Generally speaking, I advise my clients to invest short-term savings more conservatively while investing their long-term savings more aggressively; however, each individual situation varies. What about you? If you are saving money for a downpayment on a house in two years, do you have it invested in an FDIC-insured money market fund or in a few stocks of individual companies? What about saving for retirement that is still 20 years away—is your savings in cash or in a diversified mutual fund with greater potential for growth? It is important to make sure that your investment strategy aligns with your goals.
8. Work With an Attorney to Put Estate Planning Documents in Place
According to Gallup, 54% of American adults do not have a will or other estate planning documents in place. If you’re in this 54%, maybe it’s because you haven’t gotten around to it, believe it’s not urgent, or think it’s too expensive—when in reality, having estate planning documents in place is very important. Depending on your situation, the estate planning documents that you may consider drafting are a will, trust, power of attorney, and healthcare directive (and naming a legal guardian if you have minor children).
9. Give Willingly and Sacrificially
Without proper perspective, this can be a challenging goal—it’s not easy to part with money that you've worked hard to earn. However, for a number of reasons giving is an important part of a financial plan. There is a tremendous amount of joy that comes from giving your time, talents, and money to things that are bigger than yourself. Set a goal this year of giving away a certain percentage of your income—a percentage that is a little bit uncomfortable.
10. Create and Follow a Plan
You could have all of the financial knowledge in the world, but without a roadmap to follow, it is difficult to achieve your goals or even to know what your goals are in the first place. If you don’t already have a plan in place, a class that I recommend is Financial Peace University. It’s a nine-week class that is taught at different churches all around the country and the class will leave you with specific action steps. If you’d like a plan that is tailored to your specific situation and you want help putting the plan into action, another alternative is to hire a professional and work one-on-one with a financial planner.
That is what we do here at Guide Financial Planning, help individuals craft and implement unique financial plans that help them reach their own specific goals. If you would like help creating a financial plan or implementing any of these other New Year’s resolutions, schedule a free call where we can discuss what exactly you’re looking for and how we can serve you.
About Guide Financial Planning
Guide Financial Planning is led by founder Ben Wacek, who is a Christian fee-only Certified Financial Planner™ and Certified Kingdom Advisor®. He has a passion to help people of all income levels make wise financial decisions and steward their resources from an eternal perspective using Biblical principles. Based in Minneapolis, MN, he works with clients both locally and virtually throughout the country and abroad. You can follow the links to learn more about Guide Financial Planning and our team and the services we offer.