Expertise Beyond the Numbers

Financial Fitness For The New Year: The Best Time To Take Stock Of Your Financial Goals Is Now

By Greg Horning, Director, SC&H Financial Advisors

Almost 60 percent of Americans make New Year’s resolutions for themselves. It’s a time-honored tradition that millions of people undertake at the start of each year, hoping to get the fledgling year off on the right track. Unsurprisingly, the most popular resolutions by far relate to physical goals: 71 percent resolve to diet or eat healthier, 65 percent elect to exercise more, and 54 percent target a lower weight, whereas financially driven resolutions are only made by roughly 32 percent of Americans.

New Year’s resolutions don’t just have to be physical goals, they can be financial goals too, and the start of the year is a great time for people to stop and take stock of things. We all get so involved in our day-to-day that we don’t step back and reevaluate or take a look at the bigger picture when it comes to financial goal setting. The end of the year is a natural opportunity to reflect on the progress you’ve made over the course of the year, and determine whether those goals are still appropriate, or if they should evolve given new circumstances.

When we work with clients at SC&H Financial Advisors, we drive the process of reassessing goals. At the center of those conversations is a concerted effort to communicate what we’re trying to accomplish with a client’s unique financial plan, what’s changed over the course of the last 12 months, and how that change is going to impact actions moving forward. These types of reflections are essential for anyone looking to concertedly advance their financial goals.

Consider large, upcoming purchases or expenditures you may face in the year ahead. In the next 12 months, do you plan on taking a big vacation with your family, throwing a wedding for a child, or purchasing a new car? These are the types of significant financial purchases people need to really think through, and be sure they have enough available resources in the near term.

As part of your New Year’s resolution or financial checklist for 2020, evaluate your retirement planning — make sure you are set up for contributing to your retirement based on the new limits. Don’t forget about your healthcare planning either; make sure you are contributing to your HSA at the right levels. Ask yourself: has anything changed that might cause you to think differently about how you pay down debt? With the new tax laws going into effect, there are better incentives for accelerated debt payoffs, which could make 2020 an ideal time to refinance given the low interest rates.

One of the many things we help our clients address is, if we’re planning towards a goal, how have we progressed against an objective? Whether they’re saving money to put children through college or gearing up for a new home purchase, the main idea is understanding what needs to be done now to ensure there are no financial surprises during the year.

When it comes to financial resolutions and goal setting, your plans should be focused on you, your family, and your needs, not what’s going on elsewhere in the world. People overestimate the impact of these things on their own financial lives. A far bigger determinate of a person’s financial success is what they’re doing on the micro level — what their career looks like, how long they’re going to remain in the workforce, what their savings looks like, and how they are going to spend their discretionary dollars.

Setting goals for 2020 isn’t just about fitness and weight loss. New Year’s resolutions have always been about having a healthy, successful year, and strong, financial goal setting is one of the best ways to ensure you realize that success.