“Keep it Simple” is a great approach to organizing your finances

Some folks think financial planning is out of reach. While certain aspects can be a challenge, such as constructing the right asset allocation to meet your goals, the basic concepts are not. A useful approach to organizing your finances is to “Keep it Simple”.

This can help you cut through the endless avalanche of financial and investment information. The financial truth is that there are relatively simple and straightforward ways to improve your financial health.

If you look at this list and need help implementing it, give us a call at 336-659-7060.

Banish Toxic Debt

Work to eliminate all credit card debt. Consolidate accounts and create a realistic plan to rid yourself of insidious and toxic debt.

Streamline Your Investments and Reduce Costs

Two factors contribute greatly to your returns and risk: asset diversification and investment expenses. Asset diversification, especially with professional guidance, helps you avoid putting too many eggs in one basket.

The cost to run your portfolio (e.g., mutual fund fees) affects how it performs as high costs can eat away at growth.

Pay Attention to Overlooked Assets (Social Security/Retirement Planning)

Social Security is an asset that is taken for granted for many folks. If you are tempted to take Social Security early, when you are first eligible at age 62, you may want to think again:

Your check is up to 25% lower than if you wait until what’s called full retirement age. If you begin receiving benefits from age 62 up to your full retirement age, your benefits will be reduced.

Married couples benefit additionally from Social Security planning strategies that can provide additional income. The Social Security Administration is not allowed to advise on strategies to maximize your benefits, so don’t expect to learn about this from the government.

And maybe you should work as long as possible. A financial planner can help guide you to how long you should work and what you should do in retirement to avoid outliving your assets.

Your Loved Ones Will Thank You (Estate Planning)

You could be handing an enormous mess to your heirs (that is, family and friends) if you don’t have your estate documents in order – or you have no estate documents. That means a will, a living will or health- care directive (governing medical treatments to prolong your life) and granting powers of attorney to a trusted person should you not be capable of running your affairs.

Estate attorney fees are not high if they potentially save your heirs hundreds of thousands of dollars of estate tax when your assets pass to your family, friends or charity.

Avoid Excessive Tax Payments

It pays to time IRA distributions if you work (or not); consider Roth IRA conversions (if you qualify, you pay taxes up-front on the account, and then future appreciation is not taxed); and give charitably in the form of investments (instead of cash). Wise advisors consider which types of investments are best held in taxable accounts, which in tax-deferred accounts.

Your Financial Planner

“Keeping it Simple” can help you cut through the noise, focus on what’s most important and become better informed on your financial journey.

If this list overwhelms you or you have questions about how to move forward, don’t hesitate to contact us.

“Improving Your Financial Health is Not Very Hard ” FMeX. 2020.