Five Evergreen Tips to Improve Your Financial Outlook

At the start of 2020, many people wished for a year of clarity. Like 20/20 vision? As painful as the pun may be, 2020 has turned out to be even more painful for some. Instead of spending time refocusing on how to move forward in life, it’s clear that the majority of us have been stuck in a stagnant haze.

Every step we take in 2020 takes us further into uncharted territory. The global pandemic turned our world upside down. It’s been difficult to keep a level head when there’s no equilibrium or sense of stability. It has taken lives, closed businesses, shaken the job market, canceled our events, postponed our vacations, forced us to stay home, upended our children’s schooling, and increased the volatility in the equity markets. And just in case that was not enough to wrap our collective heads around, 2020 is also an election year.

The number of changes that have occurred and what we have had to endure in the last six months is staggering. Sometimes people get stuck in the thought process that the only way to keep going is to get through the day and deal with tomorrow when it comes. It’s a coping mechanism that’s easy to understand. Deal with the problems that are in front of you and cross bridges when you come to them. That line of thought should never be applied to your financial future. Despite being tied up with the present, there is a future for us all to get to, even if it may not feel like it right now.  We will get there. And even though the present is filled with volatility, there are still several things that you can do to keep your financial plans moving in the right direction.

We may not be able to control much of what is going on around us, but here are some tips you can implement that are within your control. These ideas can help you take the reins of your financial future now and retain it throughout any challenges the future may bring.

01 – Evaluate household expenses.

You may have noticed that you are not spending as much money each month right now. Many expenses that we considered normal were put on hold when restaurants and businesses closed, and we all started staying home. Before we try to return to normal, evaluate each expense that was cut and draw a line between what is essential and is non-essential. Then analyze everything below the non-essential line. Ask yourself "do I really need this?" before you sign up for something that you canceled back in April. You did not need it for the last several months, do you need it going forward? Things like gym memberships and yoga classes should be scrutinized, can you make do in your basement gym or with free online classes? Set a tighter budget for how often you go out to eat or have a night on the town. Rethink vacations and getaways by seeing what is in driving distance that you haven’t considered before and save yourself the plane tickets. A few small decisions here can add up to hundreds of dollars of savings each month, which can then be applied to savings accounts, investments or loan principals

02 – Set monthly savings goals.

Whether you are saving for a car, a house, college, retirement, or a big vacation, setting up some monthly savings targets can help you achieve those longer-term goals. The thought of saving for any of those goals individually can be daunting, but there are ways to structure your savings to help make those goals more obtainable. Additionally, it is not just about accumulating the money, but also about investing it and what type of account to use for each goal. Using the right kind of account for each savings purpose can significantly impact reaching that goal. Maximizing the tax benefits of your situation can add a lot of value in the short term and long term. Set a reasonable goal for your savings account and then after you achieve it, start applying the money you had earmarked for your savings account into an investment account like an IRA or Roth IRA. You’ll want to have a certain amount of money liquid for emergencies, this is your nest egg, or safety net. If you’re saving for a loan, take the money you’re no longer putting towards non-essentials and apply it directly to the principal where you’re able. That will compound your progress by eliminating some interest in shortening the life of the loan.

03 – Take back control of your calendar.

Just like expenses, before refilling your schedule up with activities and events, consider if it is worth the time, stress, and effort. While there have not been many positives to the current situation, it has forced us to empty our calendars and be less busy. Hopefully you have been able to use that open calendar to spend more time with family, start a new hobby, or just do things that you enjoy. While there’s no doubt that a global pandemic has brought stress and confusion, it has also given some us the luxury of having to time to slow down and be in the present.  Most of us don’t know what day of the week it is at any given point, and that speaks to how present focused we are able to be, even if it’s because we have to be. Time spent with family or getting back into something you like is precious.  We can’t let ourselves lose sight of that when we get back into a more common routine and lost in the minutia. Just like with your expenses, go back and take a hard look at what you add back onto your calendar. Do not create self-inflicted busyness.

04 – Look at your trajectory.

Try to visualize what you want your life to look like in 5, 10, 20 years, and even into retirement. Are you taking the necessary steps to get yourself there? Now is a great time to pause and look at your current financial situation and evaluate if you are on the right trajectory to achieve the goals or lifestyle that you want to have in the future. This is an area that a good Financial Advisor can add a lot of value. Small course corrections can often have a significant impact on meeting your goals, and the sooner you make that correction, the more minor of a change it will need to be, and the long-term impact more significant.

05 – Create some new, good habits.

It is easy to form bad habits, and it can be hard to change your behavior to develop good ones. Like ripping a band-aid off, many individuals were forced to kick some bad spending habits when businesses closed. Use this as a time to form some good new habits. Maybe that means reviewing your expenses more thoroughly each month, sticking to a tighter budget, paying a little extra towards that credit card bill each month, or transferring some extra accumulated savings into a retirement account. Whatever it looks like for you, now is an excellent time for that habit. It can save you a lot of money in the long run. This isn’t an easy task, not for you, not for anyone. That’s why having a Financial Advisor that knows your financial strengths, weakness, goals, and priorities is essential in formulating the right habits to meet your individual goals.

These ideas will encourage you to look at your finances and make a few changes that move you in the right direction. They can be applied in good times and in bad times, regardless of your financial situation. Our current environment has undoubtedly shocked the system, but you can still come out of all this in a stronger position than when it began.

Perhaps the most important take away is that it’s never too late to refocus, clearly define your goals, and take steps to make 2020 a year where you made substantial progress in your financial journey. If you need help implementing any of these ideas, reach out to a financial advisor today. CERTIFIED FINANCIAL PLANNER^TM practitioners are all well qualified to help you review your situation and determine the best steps to achieve your financial goals.  Swift and impactful changes can be made today.

By: Ryan Walczak, CFP® | Financial Advisor | Allegheny Financial Group | September 2020

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Allegheny Financial Group is a Registered Investment Advisor. Securities offered through Allegheny Investments, LTD, a registered broker/dealer. Member FINRA/SIPC.