12 Deliberate Decisions before Dec 31: personal financial planning
Posted on Thu, Dec 22, 2011
12 Deliberate Decisions before Dec 31: personal financial planning
Deliberately choosing the outcomes you want is the best way to put yourself on the path to achieving what is most important to you. My observation is that money is important to most people but really only to the extent that it allows them to live the way they want. So this month's focus is on some ways to both strengthen your financial plan and (more importantly) create stronger connections to those with whom you are closest.
1. Lose the Losers. No, we're not offering marriage, friendship or management advice. We're talking about your portfolio and saying that it's time to harvest investment losses. Certainly if you have holdings (mutual funds, stocks, bonds etc...) in taxable accounts that will produce capital losses (short or long-term) it may make sense to sell them. Please keep in mind that if you then wish to purchase any similar holdings for your portfolio you will need to wait 30 days to avoid the wash-sale rules and claim up to $3,000 on your 2011 tax return.
2. Get Maxed Out ... In a Good Way. Don't max out your time, energy or credit cards but DO max out your company retirement plan, at least up to what your company will match. If possible , with a 401(k) try
to go the distance to hit either $16,500 or $22,000 (with the over-50 catch-up) before year end. Solo Defined benfit plans may allow you to defer much much more and it's not too late for 2011. You don't have to fund it until your tax filing date! For many it makes sense to save as much as you can and it rarely gets easier. Did you know that you can expect to pay $6,500 - $10,000 per year for health care expenses in retirement?
3. Act On Your Charitable Impulses. Do good, feel good and get a break on your tax bill all at the same time. Many institutions that support you are hurting this year and showing your support for them is a wonderful way to walk the talk! Given the low interest rates and current rules, family gifting has never made more sense for those who are fortunate.
4. Learn About Creating Wealth in Relationships. "The Five Love Languages" by Gary Chapman is a wonderful book, and here are the five: 1. Verbal Affirmation, 2. Physical, 3. Acts of Service, 4. Quality Time, 5. Gifts. Pay attention to how you show love and how you feel loved. This works just as much for spouses as it does for children, colleagues and clients. Clearly not all of these "languages" are appropriate for every situation but it helps to be observant. Pay attention to how others give "gifts." It may serve as a clue as to how they feel appreciated. For example, my daughter recently shared this with me: "Mom I feel loved when I am understood and listened to." Hmmm.....
5. Consider Those Who Might Appreciate Verbal Gifts. This could be anything from thanking people publicly for their support to passing on your values to your kids by telling family stories. At work, this could mean taking the time to let the team know what the big picture is and how everyone fits in.
6. Consider Those Who Like to Keep Moving or May Need a Hug. Rather than taking a client to lunch, perhaps he/she would appreciate a brisk walk. Rather than throw a cocktail party, how about sponsoring a yoga class? And within your family consider that elderly people and teenagers need hugs despite their independent demeanor. How about giving a gift certificate for a massage, facial or hair appointment to someone who lives alone. The key is to be respectful, thoughtful and caring enough to notice what others may want or need but would never ask for.
7. Consider Those Who Might Appreciate a Relevant Act of Service. Who in your life would keel over if you made the coffee, got the car washed, or (at work) did the job no one else wants? Somthing small can show that you're tuned in. For kids home from college it could mean a favorite meal. For a spouse returning from a business trip perhaps a weekend devoted to something other than the usual list of chores could prove far better than something sparkly or fashionable: a simple homemade dinner, a fun project or just taking the dog for a walk together.
8. Consider Who In Your Life Could Use Your Quality Time. Whether it is a conversation at the kitchen table, watching a movie or tackling a project together, create some free time and uncluttered space to just "be with" this person (or people).
9. Give What You Can. There are many ways to give, it isn't always necessary to give money. In addition to "treasure" my church, for example also considers gifts to include time and talent.
10. Enjoy "Enough Is Enough". There is so much pressure to do everything perfectly and to please so many people. If you can't afford it...let it go. If you don't have the time...let it go. If you dread it... let it go. What the people in your life really want is for you to be available and at your best, not exhausted, resentful or broke. This is easy to say but without a little determination it seems that buying, doing and overdoing is the default mode.
11. Take Care of Yourself. Exercise, sleep, eat right and sometimes say 'no' so that you can have some down time. Give yourself permission. You can't be at your best for others if you are burned out.
12. Get Your Appointments Scheduled Now. Wouldn't it be nice to wake up on January 1st feeling like the master of your own universe? List out any advisors and doctors who need to be seen and plan a day off in January and (if need be) another in February for those much-needed appointments. If you have kids in college who'll receive financial aid, including merit scholarship applications and some time to fill out the FAFSA as soon as you can in the New Year, you can update it after your taxes are done but you may benefit more by having them to the schools earlier.
As the New Year approaches don't beat yourself up over pounds gained or plans undone. Realize that you'll still be here with the new calendar and able to tackle your goals, dreams and challenges. The Holidays are a wonderful time to practice acceptance. Use the occasion and good will to recharge and focus on affirming your priorities. These dozen decisions will provide you with lasting returns - guaranteed or your money back! Find the IRS retirement plan contribution limits here.
About the Author:
Journey Financial Planners is a fee-only, independent Registered Investment Advisor and financial planning firm in Concord, MA. Peggy McGillin, CERTIFIED FINANCIAL PLANNER™ and principal, is devoted to her clients' meeting their goals and encouraging them to living fully along the way. Journey delivers comprehensive, objective financial planning and investment management for individuals and business owners.
_____________________________________________________________________
The Successful Transition Planning Institute of Cambridge, MA, STPI provides tools and training to advisors so they may help successful business owners, executives and professionals learn how to "Think", "Live" and "Decide" what to do with their companies and careers, in order to plan for a dynamic, new life. (see video).