How to plan financially for 2021 after saying goodbye to 2020
On December 31st, 2020 as the clock struck midnight, we said goodbye to 2020 and welcomed in 2021. Most of us wanted 2020 to be the dust in the rear-view mirror. A year we never wanted to experience again. But, for all the turbulence that the year brought us, it was also an awakening. It is easy to go about life with a feeling of invincibility, having the mentality that “it’s never going to happen to me” or “I will get to it later” and then, out of nowhere the world changes. In times of uncertainty and panic you often hear the phrase, “Okay, what’s our plan?”. Imagine flipping the script and when uncertainty and panic set in you can say, “It’s okay, we planned for this”.
On the financial side, some common New Year’s Resolutions will be made. Most of the time the goals are well intentioned, but the lack of a plan or organization are the reasons why most people fall short of their goals or put them off for a later time. When working with clients, below are the key steps we take throughout the year to help them achieve these goals:
- Cash Flow Planning – We have all heard the phrase ‘cash is king’. But, where that cash is going is imperative. The first step to a well-tailored plan is having a handle on your income and your spending, and what you can allocate to each goal.
- Cash Flow Allocation – Now that we know where the money is going, is there a better way to allocate that cash flow? If someone is debt averse, they may want to allocate more cash flow to pay off debt sooner. However, with low interest rates and depending on what tax bracket that person is in, it may be better to stretch that debt over a longer period (for example, 10 years versus 5 years). Prudent tax planning is key as it can free up more cash flow and, over a long period, have a big impact on retirement.
- Risk Management – Life can throw curveballs; income accumulation and saving may be adversely affected. A good plan has a strategy to mitigate against these risks. If cash flow continues, your goals can stay on track.
- Implement and Revisit – Think of a plan as a living, breathing document. It is not something that sits on the shelf but is revisited multiple times per year. As life progresses, goals may change, and a good plan should be able to adapt.
Our focus at Tall Oak Private Wealth is on the PLAN. This past year has been living proof that life can throw you curve balls and a well-structured plan accounts for the ups and downs that life may bring. Reach out to us for a complimentary 5 YEAR WEALTH PLAN. We will help you achieve your goals with a plan that works through whatever life throws at you.
Here is to a successful 2021!
Information in this article is from sources believed to be reliable; however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the authors, Tall Oak Private Wealth, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Securities-related products and services are offered through Raymond James Ltd., member – Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a member – Canadian Investor Protection Fund.