How to Succeed Financially in 2021
With a difficult year like 2020 winding down, it can be difficult to avoid becoming fixated on the negatives. However, there is renewed optimism surrounding the pandemic with multiple vaccine options showing promise.
So how can you get a head start on success in 2021? Use these tips to prepare yourself for the new year and to help insulate yourself from the next market downturn.
1. Always make careful decisions about your finances, and never overreact.
Of course, this is easier said than done, but when it comes to financial uncertainty, it is important to take a step back before hitting the panic button. It is natural to feel anxious when something derails your financial situation, but it is important to make decisions with a clear mind. When it comes to your investments, don’t allow yourself to have knee jerk reactions to market ups and downs. Have a long-term plan for your investments, and stay the course.
Take the necessary time to consider your options, and talk to a financial planner if you need assistance before making those critical financial moves. Many of these decisions are complicated, and it helps to have experienced professionals, like our team here at Brookstone Wealth Management, on your side. With the right help and careful deliberation, you can get a jump start on financial success in 2021.
2. Assess Your Personal Situation
Take a snapshot of your complete financial situation now, so you can be prepared for next year. Everything about your personal financial situation should be reviewed and documented – from income to expenses, debt to investments. Depending on your situation, this process can be simple, or it can be incredibly complex.
If you need assistance with understanding your finances, don’t hesitate to contact our team at Brookstone Wealth Management. We have a process called your Financial Fingerprint™. It is a financial plan that is quick to assemble, easy to understand, and simple to modify as your circumstances change.
3. Trim Unnecessary Costs – Free Up Cash Flow for the New Year
Once you understand your cash flow in detail, you can review your budget to look for unnecessary spending. Identify purchases that aren’t important to your life or spending categories where you are overspending, and consider eliminating any that makes sense.
It can be difficult to learn disciplined spending, but with time, it becomes easy. By trimming unnecessary costs, you will free up funds that can be used to save or invest in the new year.
4. Build an Emergency Fund
An emergency fund that is large enough to cover several months of your expenses can help you rest easy during uncertain times. If you have not started your emergency fund, go ahead and get started right away.
It doesn’t matter if you are only able to tuck away a few dollars sparingly, you will eventually start to see your efforts grow. Most importantly, having an emergency fund can help you avoid relying on credit cards or loans during an emergency. If you prepare properly, you can weather the next downturn with confidence.
5. Have a Plan to Address Debt
Ideally you are not carrying a large amount of revolving debt, but you most likely have some installments such as personal loans, automobile loans, or mortgages. If you’ve been responsible with credit, you might also take advantage of historically low interest rates to refinance any high interest debt. The monthly savings from refinancing a mortgage to lower rates can be significant. What better way could there be to start a new year than more free cash in your budget?
To begin reducing your debt, tackle those obligations with the highest interest rates first, and pay any extra toward the outstanding balances whenever you are able. With some discipline and careful planning, you can grow your net worth by reducing your outstanding debt.
6. Let an experienced CFP® guide you into the new year.
Whenever there is uncertainty in the economy or in your financial life, it can be valuable to seek the assistance of an experienced financial planner. The new year is no exception.
There are many considerations you should make at the end of each year that can potentially lower you tax burden, so having a professional on your team is critical. If you’re looking for assistance in understanding your finances or developing a plan to secure your retirement, contact Brookstone Wealth Management today.
If you’re uncomfortable with meeting a financial advisor in person due to the pandemic, don’t worry. We have the technology to meet via the web, on your computer or your mobile device, until you are more comfortable with in-person meetings. If you want to learn more about how to prepare for web meetings, read our guide.
At Brookstone Wealth Management, we offer a complete suite of Wealth Management services, supported by an experienced team of financial and legal professionals. We are owned and led by women, and we focus on coaching, teaching and mentoring our clients. We’d love the opportunity to help you navigate to your True North.