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Steps to Get Your 2020 Financial Plan in Place

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Even if you can’t see the future, you can prepare for it by having a financial plan for 2020, says Investor’s Business Daily in the article “Your 2020 Financial Plan Must Include These 5 Steps.”

Step One—Be prepared for the worst. If you don’t already have an estate plan, now is the time. Make sure to have a living will and advance medical directive. If you become incapacitated, these are the documents you want your family to have, so they can tell health care providers what kind of care you do and don’t want. Without them, state laws will make decisions about your care, even if your family knows you what you want.

If you don’t have a will, have one created with an experienced estate planning attorney. Keep it someplace safe, and not in a bank safe deposit box.

Step Two—Update beneficiary designations. These appear in trusts, insurance policies, investment accounts and annuities. Check them from time to time, especially after major events like divorces and remarriages. If you’ve remarried, chances are you don’t want your first spouse to receive life insurance proceeds, unless your divorce agreement stipulates that you do so for children’s support. Any named beneficiary on accounts receives assets directly, regardless of the wishes expressed in a will.

Step Three—Create a written financial plan. If you have one, it’s time for a review. There should be two parts to this plan:

A net worth statement, and a list of assets and accounts, including account numbers and passwords. Include also copies of vital documents, including deeds, birth certificates, marriage certificates, insurance policies, financial statements and workplace benefit information. This should be stored in a fireproof, waterproof, locked place that you and your spouse have easy access to.

The second part of the plan is your investment plan. This should detail your overall goals, time frame, risk tolerance and investments. After a year like 2019, when markets rose by about 30%, your investment allocation may be out of balance with your plan. A sector or security that has grown to be a bigger percentage of your overall portfolio can expose you to market risk. You should rebalance it.

Step Four—Put a budget in writing. This is a basic step that many people dismiss. It helps you see how you are spending money, so you can prioritize your spending. What is worth spending on, and what is not? You can’t make informed decisions without knowing where the money is going.

Step Five—Review your credit report. Consumers are entitled to a free copy of their credit report once every twelve months from each of the three national credit bureaus. Considering ordering different ones at four-month intervals. Reviewing credit reports is helpful, if you are seeking a loan or buying a house, and you might spot theft early on.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Investor’s Business Daily (Dec. 30, 2019) “Your 2020 Financial Plan Must Include These 5 Steps”

Suggested Key Terms: Estate Plan, Will, Beneficiary Designations, Budget, Credit Report, Investment Plans, Advance Medical Directive, Living Will