Financial Wellness Month: How a Financial Plan Can Help Get You On Track for 2023
January is Financial Wellness Month. Financial wellness is about ensuring all aspects of your financial life are in good shape. This includes the basics, like a monthly budget, having an emergency fund and ensuring that your debts are under control. This is a good time for investors to review their overall financial plan and make any adjustments to ensure that they are on track. What is a Financial Plan? According to Matthew Wollman CDFA®, Vice President of Investments of the Wedbush Securities Pasadena Office, “Financial planning is an ongoing process that looks at your entire financial picture in order to create strategies for achieving both short- and long-term goals.” A financial plan is an excellent tool to help you manage your long and short-term financial goals, and to establish strategies to achieve these goals. What’s typically included in a financial plan? Wollman says, “Financial plans can include an investment plan, retirement plan, a college savings plan, and even estate planning, which is generally conducted through an estate attorney.” The components of your financial plan will be determined by your individual situation and your own financial priorities. Factors can include your age, your family situation and others that impact your financial goals. The financial planning process is a good way to work with a financial advisor to map out your goals and to develop strategies to achieve these goals. Who can help you build a financial plan? Certainly, you can put together a financial plan on your own, especially if you have a solid working knowledge of financial and investing concepts. There are software tools available that can help with the number crunching. For many people, working with a knowledgeable financial advisor makes sense. Besides their expertise in areas like investing, retirement planning, taxes and other areas, financial advisors bring a detached third-party perspective to your planning. They are emotionally vested in your future in a different way than you are, and can therefore add an air of objectivity to the planning process. Wollman says, “An advisor can help you build a financial plan, and it starts with several questions and due diligence which allows us as Financial Advisors to understand your both short and long-goals as well as liabilities. Too often financial plans lack the attention to detail to the liability side of the balance sheet. There is more to financial planning than Asset Allocation or selecting the best stock or bond.” A qualified financial advisor brings their experience in working with clients in similar situations to yours to the table. While good financial advisors will look at each client as a unique individual, they do bring a range of experience to each planning engagement gained from working with a variety of clients. A financial advisor knows what questions to ask clients regarding their current situation including their income, spending, assets and liabilities. They will gather information about the client’s investments, including IRAs and 401(k) accounts. They will also collect data about other assets such as real estate or an interest in a business. The financial advisor will discuss the client’s financial goals with them as well. These might include retirement, saving for college for their children or a range of other goals. The advisor will also ask questions of their clients to gauge their risk tolerance and their investing experience. Wollman adds, “Benefits of having a financial plan include allowing the client or family to focus on the longer-term plan, versus worrying about short-term gyrations (for example-inflation or recession) in markets that tend to cause investors to make emotional decisions, like selling when markets are down. Having a financial plan removes the emotional part of the investment process and enables investors to remain disciplined in “their” plan, whatever that may entail.” Financial Wellness Month is a good time to reach out to your Wedbush financial advisor to discuss your financial situation and your financial plan. If you don’t have a financial plan in place this is a good time to start the process. If you do have a plan, this is a good time to review it and make adjustments as needed. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.
Financial Wellness Month – Turning Your Goals Into Financial Resolutions
January is Financial Wellness Month. With it also occurring at the start of a new year, this is a great time to evaluate your financial situation, set financial goals for the year and turn those goals into actionable resolutions. Time to revisit financial goals The start of a new year is a good time to revisit your financial goals and also any changes in your life that could impact achieving those goals. In terms of life changes, did you: Get married? Get divorced? Have a child? Change jobs? Any of these and countless other life changes can have a profound impact on your finances. Additionally, January is a good time to review your monthly budget and your spending. What does your monthly income look like for 2023, and how does this compare with your spending? Tips to help improve your financial wellness January is an ideal time to resolve to take control of your finances and to get your financial house in order. Here are some steps to consider based on your situation. As mentioned previously, the first step is to look at your monthly spending versus what is coming in. If your income exceeds your spending, this is great. If it does not, your first step should be to reduce your spending if possible. If part of the issue is that your current job does not pay enough to meet your basic needs, maybe it is time to look for something else. Look at your debt. If you have a lot of high interest debt, make a plan to pay this down as quickly as you can. This might be credit card debt or perhaps student loan debt. To the extent your budget allows, make retiring this debt a priority. Create an emergency fund. Experts typically suggest that we have an emergency fund equal to six months of our basic monthly expenses. This is our rent or mortgage payment, food, heat and electricity and similar expenses. The emergency fund should be held in a liquid, easily accessible account like a savings or money market account. Building an emergency fund should be a priority for most people. An emergency fund is more important than ever with the uncertainty in the economy in general and the possibility that layoffs that we have seen in the latter half of 2022 will continue into 2023. The tech sector has been especially hard hit. Be sure you are prepared should this trend impact you and your family. Invest and save. Investing in long-term plans such as retirement is an excellent way to achieve these goals. This means starting early and sticking with it. Contributing to a 401(k) or similar workplace retirement plan is an excellent way to invest for retirement. The money comes out of your check gradually, and you will not miss it. Holiday Financial Reset The holidays can be tough on our finances. Often, we do not feel the impact until January and even into the following year. If you used credit cards to buy gifts or travel during the holidays, resolve to pay those charges off as soon as possible, ideally within the timeframe to not incur interest charges. Do what you can to help ensure that holiday spending does not put you in a financial hole for all of 2023. Beyond the holidays, winter can be tough on our finances. For those living in cooler climates, there is the cost of heating our homes, which is projected to be higher in 2023 than in prior years. Our 2022 income taxes are due in mid-April. Even if you file for an extension, you must pay the amount owed by the normal tax filing date to avoid penalties. Be sure that you know where you stand in terms of your taxes as early as possible to ensure that you do not get caught short. The new year is a good time to look at your entire financial picture, including your investing and financial planning strategy. Contact your Wedbush financial advisor to discuss your situation with them. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.