There’s never been a better time to make sure your finances are in order.
It’s stating the obvious, but we are now all living through a period in history none of us will ever forget — “uncertain times,” indeed. The impact on our families, communities, and the country as whole has been, and will continue to be, profound. It’s a scary time, but there’s one important piece of advice that can see you through the worst:
Focus on the things you can control.
As the old saying goes, “When life gives you lemons, make lemonade.” Today’s economy is a real lemon, but obsessively watching the news and the state of the stock market isn’t going to help. Instead, take a look at what you do have and make the absolute most of it. In this way, you’ll be squeezing maximum value out of your personal finances and positioning yourself for a better tomorrow.
Here is a checklist of action items that you can fine-tune before life speeds back up again. If you’ve never thought about some of these points, that’s okay. Now is the perfect time to get started.
Most people do this once and forget about it for decades, but your estate planning needs change just as you grow and change over the years. Make sure your current plans still meet your needs.
- Review Your Beneficiaries. This includes your investment accounts, retirement accounts and pensions, bank accounts, and life insurance. Make sure your beneficiary choice and contact information is up to date.
- Review Your Documents. This includes your Last Will and Testament, Power of Attorney, Living Will and perhaps a Living Trust. Are they up to date? If you need to get started on any of these, we can provide resources for you.
- Inform Your Loved Ones. Should something happen to you, do your loved ones know what to do? Where to find your documents? Who to contact? Create a document and provide both digital and hard copies of this important information.
If your insurance auto-renews each year, you might not have the correct coverage for your current needs. You also might be overpaying!
- Review Your Coverage. Is your homeowners insurance sufficient? Should you still be carrying collision coverage on an older vehicle? Do you have enough cash on hand to raise your deductible and enjoy premium savings? Ask for new quotes to see how these changes affect your bottom line. This is also a great time to ask for discounts.
- Record Your Belongings. Take pictures or video of your valuables to provide to the insurance company if they are stolen or destroyed. It’s the best way to streamline a claim and make sure you get what you’re entitled to.
- Consider an Umbrella Policy. This extra liability insurance is typically a great value when it comes to protecting yourself from a lawsuit that could ruin you.
- Recalculate Your Life Insurance Needs. Do you have the right amount of life insurance to protect your family? Try a simple calculator to see how much you need, or get in touch for help.
When’s the last time you reviewed your monthly budget? Of course, you don’t want to use the last 30 days of spending as a guide, since many normal spending habits have been forced to change as we practice social distancing.
- Use 2019 Numbers. This will help you get a more accurate view of your typical income and spending. By looking at real numbers, you can see how much you actually spend in different categories and make some adjustments if needed.
- Review Your Auto-Pay Expenses. It’s so easy to forget about old subscriptions and services we no longer need — but that we still pay for via auto deduction. Cancel these budget vampires and breathe a sigh of relief.
Recent tax law and IRS rule changes mean that you might be missing out on some savings.
- Consider Converting to a Roth IRA. With many IRAs being down in value, converting a Traditional IRA to a tax-free growth Roth IRA may save money on taxes. We’re happy to discuss your options to help you make the most of your retirement.
- Set Up IRA Contributions: See if you can increase your contributions to maximize your savings. If you didn’t make 2019 IRA contributions, you can still do so until July 15, thanks to a COVID-related IRS extension.
- Explore Charitable Giving: The CARES Act has expanded deductions for charitable giving this year, so it’s a great time to help worthy organizations. Qualified Charitable Contributions (QCDs) can help you to support causes you believe in using required minimum distributions from retirement accounts.
With extra time on your hands, it also makes sense to do some general financial housekeeping to make it easier to review your paperwork in the future.
- Update Your Financial Dashboard. If you’re using personal finance software, be sure you’re linked to all your current accounts for accurate tracking and budgeting.
- Trash Old Documents. Be sure to shred those papers to protect sensitive personal information and account numbers.
- Organize Your Financial Files. Get those tax returns, insurance policies, and more into neatly labeled folders for ease of use later.
- Scan and Save Important Documents. If you don’t already have digital versions of your paperwork, take the time to scan them and create a digital filing cabinet now.
Some thoughts about planning for the future.
With your financial life organized and streamlined, you should feel much better about things. You have all of your information at your fingertips, and that makes it easier than ever to make some smart choices about the future.
If you’d like to talk about your investment options and financial planning needs, we’re always here to help. We know it’s a stressful time, and we pledge to do our best to provide clarity, transparency, and advice that will help you make your best moves in these difficult times.
Please reach out if you’d like more help with financial planning — we’ll be standing by!
In the meantime, stay healthy, safe and sane — and try to enjoy the lemonade you’ve worked to create out of this situation.