We’re all busy people – and it’s easy to overlook the importance of regularly evaluating your financial health. However, we make time for our routine medical check-ups to maintain our physical well-being, so we should also prioritize financial health check-ups to ensure our financial stability. By reviewing financial plans periodically, you’ll be more likely to stay on track to meet your goals. Plus, these check-ups can help you prepare and adapt to changes in both the economy and your personal circumstances.
There are many ways in which your financial progress can be derailed, which is why it’s essential to stay vigilant and adaptable as you monitor your financial growth. You may find areas of improvement as you check-in on your financial health, which will help to keep you on a path towards growth.
HighPoint Advisors, LLC has been helping clients at all stages of their careers and lives track and adjust their path towards personal financial independence. Serving clients in Syracuse, NY as well as cities across the country, we provide guidance on retirement planning, budgeting, debt reduction, as well as many other areas of financial planning for individuals and families.
External Factors That Impact Your Finances
There are many known and unknown factors, which we cannot control, that will almost certainly have an impact on the progression towards your financial goals. New regulations or laws, changes to the tax code, or advancements in technology are just a few examples. Some can be positive, and some can be negative. Here are some common factors to consider:
Positive:
- Economic growth – a widely expanding economy is generally good for employment, wages, consumer spending, and many other aspects that help us get ahead.
- Falling interest rates – lower interest rates could mean more access and less cost to get a loan such as a mortgage or a car loan (or refinance an existing loan).
- Rising stock markets – booming financial markets can increase the value of your invested assets, including retirement plans that you are contributing to.
- Tax reforms – could create opportunities for increased savings and investments, or could reduce the amount you pay in taxes in a given year.
Negative:
- Recession or economic downturn – could lead to reduced income or even job loss, as well as a general slowdown in overall spending in the economy.
- Rising inflation – erodes the purchasing power of your income and savings.
- Market volatility – swings and drops in the financial markets can lead to investment account values moving lower during times of market stress.
- Geopolitical events – The increasingly interconnected nature of the global economy means that events in one part of the world can have far-reaching effects in another part of the world. For example, the 2008 global financial crisis showed how problems in one country’s housing market could impact financial institutions worldwide.
Adapt As You Go
Your financial needs and goals evolve over time. The plan that worked for you in your 20s may not still be appropriate when you’re in your 40s or 60s. Regular financial check-ups help keep you current throughout your changing life stages.
In your early career (20s-30s), you should focus on building an emergency fund, paying down debt, and beginning to invest for long-term goals such as retirement. Sign up for an employer-sponsored 401k or 403b plan, if you have access to one.
During your mid-career (40s-50s) phase, you may be focused on prioritizing wealth accumulation, protecting your family with insurance(s), saving for children’s education, and maximizing retirement contributions. Your highest earning years are when you can seek to maximize your financial efforts towards your plan.
As you approach retirement and beyond (60s+), your goals may shift towards preserving wealth, managing healthcare costs, and creating a sustainable income stream for retirement. While enjoying the golden years, many families often work towards ensuring that their hard-earned assets are passed on to the next generation.
Benefits of Regular Reviews
- Goal Alignment and Adapting to Life Changes. Adjust your strategy as you go through major life events such as marriage, having children, inheritance, or changing careers. Be mindful that your financial actions are consistent with your short- and long-term goals.
- Identify New Opportunities. Stay informed about new financial products or strategies that could benefit your situation, such as investment opportunities or tax-saving strategies.
- Risk Management. Look out for and address potential risks, such as inadequate insurance coverage or improper market exposure in your investments. Reassess your portfolios to ensure it aligns with your current risk tolerance and financial goals.
- Manage Debt Effectively. Keep track of your loans and other debts and develop strategies to reduce them over time. Look for opportunities to refinance or consolidate debts if possible.
- Increased Confidence. Always staying aware and prepared for unexpected events will provide you and your family with greater financial security. This sense of comfort may lead you to feel that your goals are within reach.
Best Practices for Regular Reviews
To make the most of your financial health check-ups:
- Schedule Regular Reviews. Review your finances at least annually or after significant life events. Set a calendar reminder, if necessary.
- Consult a Financial Advisor. Professional advice can provide valuable insights and tailored strategies. Consider working with a financial advisor or accountant for expert guidance.
- Review and Update your Financial Statements. Examine your key documents such as wills, retirement plans, insurance policies, cash flow, and balance sheets. Look for trends and irregularities, and make changes as needed.
- Update Your Budget. Review and adjust your profit and loss statements, cash flow, and balance sheet. Make any needed adjustments based on changes in your income and expenses.
- Reassess Your Goals. Regularly track your progress and evaluate your financial goals to ensure they are still relevant and achievable. There are various budgeting tools and financial apps out there that can be helpful.
Review Your Progress with Us
Being proactive is key. Remember, your financial health is an ongoing journey that requires regular attention and care. Regular financial check-ups provide an opportunity to assess your current position, adapt to changes, and set yourself up for long-term success. By staying engaged with your finances, you’ll be better equipped to weather challenges and seize opportunities.
At HighPoint Advisors, LLC, our advisors have the experience and critical eye to help keep you on track through the years. Life happens, and we stand ready to work with you to make necessary changes along the way to help you reach your planning goals.
Contact us today to set up your next financial review!