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Yes, Even 2020 Needs A Financial Tune-Up

Yes, Even 2020 Needs A Financial Tune-Up

| December 23, 2020

With the end of 2020 in sight, we understand if you want to hide under a blanket and wait for the new year to pass.

But even with the drudgery of a year in isolation, the turn of the new year calls for a reset and refresh for your finances. Like most Americans, your spending, saving, and financial planning habits probably changed drastically this past year. According to a recent Bankrate survey, almost half of Americans say they’re prioritizing getting caught up or staying current with their bills. We’re also getting more organized with our finances, spending less, and saving more.

Maybe you hunkered down and saved the money you’d usually spend on a vacation, or maybe you bought a house to have more work-from-home space. You may have lost your income and had to dip into an emergency fund or retirement savings. Whatever your situation, priorities have shifted, and with that comes the need for a financial tune-up.


Review and Evaluate Your Finances.

Tidying up your finances starts with reviewing them. Ask yourself, have you met your financial goals? Did you pay off the debts that you hoped to? Did you keep within your budget? In the context of the pandemic, it’s important to evaluate how your priorities have changed. If you bought a house this year to have more space and work from home, you probably spent less on transportation. Do you see yourself returning to an office after the pandemic has subsided, or do you want to keep this new, remote arrangement so you can spend more time with your family? While your at-home office expenses and grocery bills may have risen, you could budget less for mileage and eating out in the new year. Look at the big picture of your past year and think about how new priorities have shaped and changed your finances.


Set Goals for the Upcoming Year

The information you glean from your year-in-review will inform your goals for the upcoming year.

It’s an important step in a financial refresh: setting goals helps keep your budget in check, can help you get out of debt, increase your savings, and help you save for retirement. Your financial goals help you know where you’re going, and with all the uncertainty of the past year, we all could use a little direction.

Keep in mind that you’ll have short-term goals and long-term goals. Smaller, more modest financial goals could include getting out of credit card debt, being able to eat out more often, or saving up for a summer vacation (when we can safely travel again!). These will help you achieve your longer-term goals; getting out of debt means you can save up for a house, for example. Both sets of goals work in tandem, and dictate how you need to spend and save.

Setting goals doesn’t necessarily mean that they’re new; you may have a goal from this year that you want to continue tackling for the next several months into the new year. As you evaluate your year, you realize you need more time to achieve a goal than you thought. It’s important to keep the right mindset about goals; just because you don’t “achieve” them doesn’t mean that you’ve failed. Different financial goals sometimes require different strategies. Not reaching a goal right away just means you have to re-strategize and keep going. 


Check-In on Your Long-Term Financial Goals

Long-term financial goals can be stressful. How can we predict what happens in 7 or 10 years? But setting long-term financial goals and then following up with them is a healthy part of financial planning. Think big about them and be specific; traditional goals like saving for retirement or a college fund can be uninspiring and, therefore, unmotivating. Maybe you want to start your own business and become an entrepreneur. The possibilities depend on what you value and really want to achieve from your life.

If you’ve already created long-term financial goals, it’s important to keep a level-head about them, as their success often relies on investments. Sometimes we get caught up in trying to control what’s happening now out of fear of not reaching our long-term goals. This year, where the market was especially volatile, is a good example of why you shouldn’t check your stock portfolio every time the market drops. Everyday anxieties can make long-term goals feel like they’re on shaky ground when in reality, they’re not. Taking the time to review your long-term goals for the new year will show you the bigger picture of your progress. Then you can adjust your actions more realistically, and without a lot of background noise.


Get Help to Make Your Goals a Reality

Worries that you’re not on the right track? Call your financial advisor and set up a time to talk. A financial advisor can guide you through the steps for setting up a solid financial plan that is tailored to your goals. The first call is always complimentary.


CONTACT US to speak with an experienced financial advisor today. We can help you plan for the future you want.