“What did you accomplish during the pandemic?”
I gotta tell you, if someone asks me that my answer is not going to be that I learned a new language or grew my own vegetables. It will be something much less admirable like became a master of door dash and had internal debates about how many times a week IS it acceptable to get an Amazon delivery (I’ve settled on two). All kidding aside, during the past year many clients have shared their stories with me- some terribly sad, some quite positive- but all with the same feelings of surreality and a sense that this is a time of pause for introspection to create a life going forward that truly reflects what is important to each of us- myself included.
Admittedly, I’ve done my share of mindless spending to cope with pandemic stress, and time has gotten away from me as far as staying on top of some personal “business” things- perhaps you’ve had the same experience. So as we start to get back to “real” life and whatever those individual new normals will be, now is a good time to shore up our financial foundations so that our new version of life will be at its most secure. Even if you’ve been largely unaffected financially (or even have seen your financial situation improve), the ground has shifted under us all and your plan may need some tweaking.
Areas to do a “new reality” check on:
Cash flow– how are you balancing the 4 short term uses of money? We can use money to:
- Live (spending)
- Give (sharing/donating)
- Owe (taxes and paying down debt)
- Grow (savings)
Emergency savings– is there enough to cover a financial emergency? To take advantage of opportunities that may come along? Cash = options.
Risk management– is your insurance up to date? Do you have enough life insurance? One thing we’ve all become more aware of is the fragility of life.
Estate planning– and along those lines, are your end of life plans in place, current, and known to your loved ones?
Tax planning– there has been a dizzying amount of tax changes in the past few years. Are you taking advantage of the tax breaks available to you as well as efficiently planning to minimize taxes?
Investments– after the market swings we’ve witnessed, are you in invested in the appropriate places given your planning horizon, financial needs, and risk appetite? Are you aware of investing biases and how they may be impacting your choices?
Long term/retirement planning– whether your finances have changed for the worse or better, now is the time to review your progress toward your existing goals, or maybe change your goals all together.