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Jump-Start Your Financial Plan For 2020!

By Angela Dorsey

It’s that time of year for a fresh start and new resolutions. What are your goals for 2020? Eat healthier? Exercise more? Strengthen your relationships? Advance your career? Although these are all worthy goals, I encourage you to consider one more: set up your financial plan. You know you should do it, but you keep it putting off. Why not make 2020 the year you finally cross it off your to-do list and adopt a money mindset?

As with any goal, your chances of reaching it increase greatly when you have a solid plan in place. When it comes to financial goals, that solid plan is critical. Don’t know where to start? Check out these 6 steps to help you jump-start your financial plan for 2020. 

1. Create Your Budget

Do you have a budget? The foundation of any financial plan is knowing exactly how much you earn, how much you spend, and what you spend it on. So your first task is to record everything you spend for at least three months (the longer, the better). This can be done by carrying around a small notebook, entering your expenses into a budgeting app on your phone, or automating the process with a service like Mint. At the end of three months, calculate your average monthly spending for various categories (food, entertainment, utilities, clothes, gas, recurring bills, etc.). If you’ve never done this before, I bet the results will surprise you.

2. Set Financial Goals

Now that you have a clearer picture of where you are now, it’s time to define where you want to be in the future. When would you like to retire? What quality of life do you want? How much will you need in your retirement account to afford this quality of life? Retirement is a big part of financial planning, but don’t forget to include all your short-term and long-term goals. Want to move into a new lake house in 10 years? Pay for your children’s education? Donate to charities? Write it all down.

3. Design A Savings Road Map

So far you’ve defined where you are now and where you’d like to be. Now it’s time to make a plan to bridge the gap. Assuming an average return on your investments, how much do you need to put away each month to reach your goals on time? Does your budget allow for this? If not, what steps can you take to either reduce your monthly spending or increase your monthly income?

4. Put Together Your Portfolio

Unfortunately, stockpiling your savings under your mattress won’t get you very far. The key to achieving your financial goals is creating an investment portfolio strategically diversified to meet your personal needs. The earlier you get this started, the more you’ll benefit from the exponential power of compound interest.

5. Define Your Exit Plan

The last part of your plan is creating exit strategies for each goal. You need to be able to access your money when you need it. If you skip this step and just dump all your savings into retirement accounts, you’ll be in for an unpleasant tax surprise when you want to pay for the aforementioned lake house or college education. So keep in mind when you’ll need to access your money and how to set up your portfolio accordingly. 

6. Schedule Check-Ins

At this point, you’ve set up your plan, but your work is not quite finished. Now it’s time to maintain. You’re bound to experience many life changes between now and retirement, and you must adjust your plan accordingly. Check-ins are easily forgotten, so it’s best to schedule it into your calendar. Aim to review your progress every six months or whenever your life situation changes (income change, change in expenses, change in goals, etc.).

We’re Here To Help

From a bird’s-eye view, it seems like a straightforward process, but we know that it can be easy to get stuck in the details and feel overwhelmed. But don’t worry! Our team members at Dorsey Wealth Management are experts in designing personalized financial road maps to help people achieve their goals. If you’d like to learn more about how we can help you set up your financial plan, schedule a free introductory 30-minute phone call today! 

About Angela

Angela Dorsey is the founder and fiduciary wealth manager at Dorsey Wealth Management, a fee-only financial planning firm based in Torrance, California, helping successful women prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a Certified Financial Planner™ (CFP®) and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband and two children. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.