A CFP’s Money Checklist for January
A CFP’s Money Checklist for January

A CFP’s Money Checklist for January

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Save more, spend smarter, and make your money go further

Every year, millions of Americans make New Year’s resolutions but only about 8 percent are successful in achieving them.  And saving money is one of the top five New Year’s resolutions and also in the top five for most commonly failed.

Instead of setting yourself up for another year of “failing” with your financial resolutions, make it a little easier on yourself this year and come up with a plan instead. Here is a checklist to help you make 2020 your best financial year yet:

#1 What Do You Want?

Have clear financial goals and pick your top 3 to focus on

I find that most people have an idea of the financial goals they want to achieve i.e. pay off debt, save into cash cushion, save for retirement, yet have not taken the time to map those goals out in more detail nor prioritize what goals they should focus on first. After working with thousands of people in their financial lives over the years, I find that what people need most is to focus on their top three financial goals based on where they are in their financial life, life stage and the priority of their goals.

For example, if you are 25 years old in your first job, overwhelmed with your student loan debt, and don’t have that much extra money to save every month, your focus this year may be to commit to sticking to your budget, setting up an auto-savings of $50 per month into your cash cushion and work on ways to consolidate or pay off your student loan debt faster. Even if that means you are not saving for retirement, by focusing on these top three goals first, you are setting yourself up for a more sustainable financial foundation and then come next year, you can review and add in your retirement goal as a top three. Get the point?

#2 What Are You Working With?

Calculate your Net worth, Review your credit score and credit report to see where you stand

Once you have a clear road map of your top three financial goals for the year, you need to access what you currently have in your financial life. This means calculating your net worth (which you can easily do with a free app like Mint), or reviewing your assets and liabilities, checking your credit report to ensure its accuracy and credit score along with your income and expense breakdown. This is the detailed work that most want to overlook but a crucial step to start your year off on the right foot. If you don’t know where you want to go and where you are starting from financially, how will you ever get anywhere?  So pull out a pen and paper and start writing out all this information to give you a clear snapshot of your current financial situation.

#3 Are You Settling?

Get a High Yield savings account and Set up auto-savings

So many people I work with have savings for emergencies but fail to actually have this money saved in an account that earns them a decent interest rate. So review where you hold your savings and if you are not in a high yield savings account, take action to open one up. Also, set up auto-savings into this account to build money for the short-term goals you are saving for such as your cash cushion, travel fund or home fund.  Even if it is just $50 per month, when you set up auto-savings it takes the thinking out of it and makes savings super easy in the long-run.

#4 How Much Will It Take?

Max out your retirement plan contributions in 2020.

With a fresh new year upon us, it is the perfect time to review how much the maximum amount to contribute to your retirement plan is, whether it be a 401k, Roth IRA or SEP IRA, etc. Then divide that maximum contribution by 12 months and see if you can set up that amount to be deducted automatically from your checking account or paycheck every month to max out your retirement plan for the year.

With this clarity, you can work this new contribution amount into your budget so again you are saving every month for your retirement goal without even thinking twice about it.  Stop making saving hard for yourself and get in the habit of thinking of your savings as another bill you have to pay before you can spend money on discretionary items.

#5 Who Has Your Back?

Hire a CFP

After being a CFP for about 14 years now, I find that most people still have a misconception about who needs to work with a financial planner. Let’s get this straight, everyone and I mean everyone needs to work with a financial planner. You don’t need to wait until you make more money or have more assets to hire help. In fact, the opposite is usually true. Meaning it is the people who hire a financial planner professional to help them along the way that usually makes more money and have more assets in the long-run. The benefits of having a certified financial planner on your team are endless. From helping you gain clarity on your goals, filtering through the endless financial information out there to help you keep your emotions and behaviors in alignment with your goals, all of these factors make the fee for the professional help worth it in the long-run. There are plenty of great financial planners out there doing ethical, integrity-based work so make sure you have one of those types on your team. You can search for a CFP (certified financial planner) in your area here.

2020 is your year to become financially wise and stop falling tap to these new year’s resolutions statistics. Become the one who actually breaks the norm and goes after and create what you want for yourself financially!

Save more, spend smarter, and make your money go further

Brittney Castro

Brittney Castro, CFP®, CRPC®, AAMS® is the founder and CEO of Financially Wise, Inc., Entrepreneur and Speaker. Connect with her on Instagram or Linkedin. More from Brittney Castro