Ask the Expert | SUZANNE ANTONELLI, CPF®
Make 2021 the Year You Get Your Finances in Order
Q: I need to get my finances in order, where do I start?
A: Financial issues are one of the leading causes of stress. Worry about debt, saving enough for retirement, paying for college, and other financial issues can take a toll on your relationships, your health, and your peace of mind. Much of this stress can be alleviated by frankly assessing your financial concerns and implementing a plan to mitigate them. Resolve in 2021 to take control of your financial future.
1. Reduce Your Debt Burden
Debt is your worst enemy and the greatest obstacle to retirement. Determine what you owe and pay off the debt with the highest interest first. Consider consolidating your debt, and always pay more than the monthly minimum payment. Mortgage interest rates are historically low; if you have not yet remortgaged do your research and see if you can get better terms. Resolve to spend less than you earn and put your credit cards on ice.
2. Spend Less
Studies have shown that most middle and upper middle class people do not consider themselves well off. The reason? People tend to spend what they make and live from paycheck to paycheck no matter their level of income. Resolve to shop with a list and resist impulse or boredom shopping; budget and save for large ticket items.
3. Save More
Reprioritizing your mindset from instant gratification to future security will literally pay dividends. Funnel your savings into an automatic transfer from your bank account to an investment or high-yield savings account. Resolve to increase your retirement savings, increase the percentage you allocate to your 401(k) or other qualified retirement plan, fully fund your IRA this year (it is not too late to fund 2020 you have until April 15, 2021), or put a percentage aside in an after-tax account from every paycheck to build your safety net and accumulate wealth.
4. Make a Financial Plan
Create a personal balance sheet. List your assets and liabilities. Reflect on your financial goals, then map out how you can increase your assets and reduce liabilities. Do you need to increase savings or work a few years longer, or are you on the right track? Fear of the unknown is more stressful than having a clear picture of your finances and a path to gaining financial security. Resolve to create a plan and work towards your goals.
Suzanne Antonelli, CFP® has been a trusted financial advisor to individuals and their families for over 30 years. Antonelli Financial Advisors work with clients to establish and prioritize goals in each stage and transition in their lives; focusing on accumulating wealth, protection from the unexpected, providing for a comfortable retirement, and legacy planning. For more information please contact firstname.lastname@example.org or 313.290.2602.