Is Your 2022 Financial Plan Ready?
7 Financial Planning Tips for the New Year.
Happy New Year from the entire team at Illumination Wealth! Now that 2022 is upon us, it’s time to make sure you have a strong financial plan prepared for this year and beyond. Whether it’s financial independence and retirement planning, business planning or tax planning, we’ve got you covered with some useful tips for your 2022 financial plan.
Tip #1: Think Short-Term and Long-Term
A key part of any successful financial plan will be making sure you are meeting your financial goals for this year. Are you earning what you want to earn, optimizing your 2022 taxes and living the lifestyle you desire? In addition to this short-term mindset, you must also be thinking long-term with your financial planning strategies. What kind of money are you putting into savings, college funds and retirement funds? How are you building your investment portfolio for future gains? How is your business set up for continued growth and prosperity? Is your family taken care of if something happens to you? These are all important questions to ask as you seek to find the ideal balance between your short-term and long-term financial planning.
Tip #2: Calculate Your Net Worth
The beginning of any new year is a great time to take stock of your financial situation and calculate your net worth. It lets you know where you are on your financial journey. Knowing your net worth will help you in setting both your short-term financial goals for 2022 and your long-term financial goals for the years and decades ahead.
Tip #3: Update Your Financial Goals
Now is also an opportune time to rethink, adjust and update your financial goals based on where you stand now versus where you want to be by the end of this year, in the next 5-10 years, etc. Our lives change. So do our priorities, incomes and other factors. Maybe you are planning to get married or have children. Perhaps you are starting a new business or looking to expand your investment portfolio. Use this time to refine your financial goals and update your financial plan accordingly.
Tip #4: Work to Improve Your Financial Situation
Depending on where you are in life, this step may be different for everyone. However, there is almost always room for some improvements in your financial situation. Here are some simple goals you may set for yourself in 2022:
- Pay down debts
- Increase retirement fund contributions
- Improve credit score
- Increase personal savings
- Invest more
- Increase tax-deductible charitable contributions
- Increase non-taxable gifts to heirs
- Improve health or life insurance policies
Tip #5: Don’t Forget About Tax Planning
The new year has started and some new tax laws are always in effect. However, it’s never too late to improve your tax situation. You can continually make adjustments to your financial plan to increase tax deductions and decrease tax liabilities. This is true for your personal taxes and your business taxes if you are a business owner.
Tip #6: Rebalance and Diversify Your Portfolio
As you review your financial plan to begin the year, look at your investments and rebalance your portfolio for better results. Review your stocks, bonds, retirement accounts and other investments. Dump things that are underperforming and look for new opportunities. A balanced, diversified portfolio is generally the best recipe for long-term financial success.
Tip #7: Hire a Financial Planner
Last but not least, you’ll want to work with an expert when it comes to financial planning, business planning and/or tax planning. Sometimes it takes an objective eye and an experienced touch to see where improvements can be made. You don’t have to be alone on your financial journey. Let a professional financial planner help you down the road to financial independence.
To learn more about Illumination Wealth’s financial planning services and to talk with one of our experienced advisors, contact us today. Let’s make 2022 your best year ever!