This article was co-authored by HBKS Financial Advisor, Shawn Fodge and HBK Senior Manager, Bill Sebelle
The beginning of a new year can bring excitement and a renewed sense of purpose. Resolutions are often made as many of us reflect on the past and contemplate positive changes we can make in the future. This is especially true when it comes to your financial well-being. According to a recent study by Bankrate, close to 90% of Americans have set a financial goal for 2024.
While making resolutions is easy, keeping them is hard. Research has shown that as many as 80% of people fail to keep their New Year’s resolutions by February and only 8% manage to keep them the entire year. Making a change requires more than merely motivation. Experts say that to truly make a change that is meaningful and lasting, you need a specific goal, determination, an eagerness to learn, balanced with a practical approach and a well-thought-out method for enacting the change. Successful change also happens when you have someone guiding you and helping keep you accountable.
To help guide you to a financially successful 2024, here are ten tips for planning financial goals, collecting tax data, and ensuring a prosperous start to the new year.
1. Reflect on the Past Year: Before diving into setting new financial goals, take a moment to reflect on the past year. Evaluate your financial successes and challenges. Did you save what you intended? Are you satisfied with the direction of your portfolio? Were there unexpected expenses that caught you by surprise? Reflecting on the past can provide valuable insight and focus as you set your resolutions for the new year.
2. Set Goals For Your Specific Needs: Write down specific, measurable goals for the new year. Your goals should align with your unique situation. Whether it’s optimizing investment returns, diversifying assets, paying off debt, or expanding philanthropic endeavors, knowing what you specifically want and mapping out how you can get there is paramount. Work with your advisors to identify targets and deadlines to plan cash flow needs throughout the year. As an example, if you expect to receive stock options or supplemental retirement benefits, know how to maximize their benefit and know what deadlines exist for the coming year.
3. Engage with Financial Professionals: Experienced, licensed professionals can help elevate your plans and ensure you are using all means necessary to achieve your goals. Collaborate with your financial and tax advisors to ensure that you are getting the most from their experience. Discussing your goals with your advisors can uncover opportunities for tax optimization, risk management, and strategic investment planning. Be proactive and schedule time to meet with your financial advisors. Depending on your needs, you may need to meet with your advisor annually, bi-annually, or quarterly. Having regularly scheduled meetings provides the expert guidance and accountability needed for long-term financial success.
4. Strategic Tax Planning: More complex portfolios can introduce more intricate tax scenarios. Engage with tax professionals early in the year to proactively plan for tax liabilities. Explore strategies such as tax-efficient investments, charitable giving, and estate planning to optimize your overall tax position. Identify whether you will need to extend your tax returns or file in the spring. Work with your advisors to make sure that you are up-to-date on changing tax laws and how they impact your plans.
5. Collect Tax Data Early: Don’t wait until the last minute to gather tax-related documents. Start collecting W-2s, 1099s, and other necessary documents early in the year. This proactive approach can help you avoid the stress of a last-minute scramble and may allow you to identify potential deductions or credits.
6. Evaluate and Adjust Estate Plans: Estate planning is significant for individuals to safeguard assets and facilitate smooth wealth transfer. Review your estate plan regularly, especially before and after significant life events, changes in laws, or changes in financial circumstances. Work with your advisors to ensure your plan aligns with current laws and reflects your wishes regarding wealth distribution. Experienced financial and tax advisors work with you to make a tailored estate plan that best protects your interests and achieves your goals. Review beneficiaries, especially if you’ve recently experienced any significant life events, such as marriage, having children, divorce, or death.
7. Review Charity Plans: Philanthropy can be a meaningful aspect of financial planning. Consider refining your philanthropic goals, exploring impact investing, and establishing a structured approach to charitable giving. Engaging in philanthropy with a strategic mindset can amplify the positive impact of your contributions.
8. Review Tax-Efficient Strategies: Take advantage of tax-efficient strategies to minimize your tax liability. Contribute to retirement accounts such as 401(k)s or IRAs, as these contributions may be tax-deductible. Familiarize yourself with available tax credits and deductions to ensure you’re maximizing your savings.
9. Stay Informed About Market Trends: Work with advisors who will help to keep you abreast of market trends and economic developments that may impact your wealth. Staying informed about global markets, geopolitical events, and emerging investment opportunities will allow you to track your goals with your advisors. Work proactively with your advisors to regularly review your investment strategy in light of the evolving financial landscape. Experienced advisors can offer solutions and plans to manage your potential exposure to changing markets. Risk management, including insurance planning and alternative investments can be complex and experienced advisors can assist with developing a plan specific to your needs.
10. Don’t Just Set and Forget: Plan to revisit your goals throughout the year and work with your advisors to ensure you are on track to meet your goals. Be mindful of your circumstances and check in with your advisors if something unexpected occurs that may impact your plans.
Instead of resolving to do better, work with your financial advisor to craft a financial strategy that extends beyond traditional savings and investment goals to include tax optimization, diversified investments, estate planning, and philanthropy. By making this change, you’ll set the stage for a prosperous and secure financial future in 2024 and beyond.
The information included in this document is for general, informational purposes only. It does not contain any investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any investment advice. If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.
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