Four areas to review with your financial planning team
As Spring begins, many of you have settled into routines established at the beginning of the year, whether it be maintaining regular doctor checkups, healthier eating habits, or a consistent workout routine to improve your overall health. But how often do you consider your financial well-being? As you aim to improve your physical health, scheduling time with your financial planning team is equally important. It is easy to overlook crucial updates, like refining cash flow strategies, optimizing your tax situation, revising beneficiaries on investment accounts and insurance policies, reviewing will executors, or updating insurance policies to reflect your current situation. All these areas should be revisited every year to ensure your financial health remains in peak condition.
Aligning Cash Flow and Tax Planning
We encourage clients to maintain six to twelve months of expenses in a cash savings account, but cash flow planning goes far beyond having a cushion. During client meetings throughout the year, we work to project your future tax obligations alongside your regular spending. We want to ensure enough cash is set aside to cover any tax payments without affecting your lifestyle, and to eliminate any surprises come tax filing season.
The financial planner’s job is to alleviate stress by showcasing additional opportunities that optimize savings. For example, a couple recently approached us to better understand their financial future. They did not actively track their expenses and whatever entered their checking account was typically spent by the end of the month. When we sat down to review their cash flow and plan for future tax obligations, we identified surplus funds that could be allocated to their retirement portfolio without affecting their day-to-day needs. The family’s standard of living remained unaffected, and they are now saving more for their future – providing more possibilities for retirement and beyond – a true win-win.
Other clients have found opportunities to maximize savings through tax strategies for their businesses or gifting directly to heirs. Situations like these highlight the importance of meeting with your financial planning team at least once a year. Your financial planner should not just help you crunch numbers; they should be able to make a meaningful impact on your life, one that lasts a lifetime.
Avoiding Emotional Investing
The economic environment is constantly changing with new policies, world currency movements, and geopolitical events. But letting your emotions dictate your investment moves can be as tragic as abandoning your healthy eating habits every time you have a stressful day — short-term reactions can derail the steady progress you’ve worked so hard to maintain, leaving you worse off in the long run. Instead, discuss key topics with your financial planner. Review the strategies you have in place and whether your investment allocations are set up to accomplish your financial goals regardless of the market environment. Make thoughtful changes and take an “out of sight, out of mind” approach. Let your financial planner take the lead.
Do You Need to Update, Cancel, or Buy an Insurance Policy
When meeting with your financial planner, bring a list of all your insurance policies. They can help you evaluate your coverage to determine whether your policies remain relevant to your current situation. This is an easy way to optimize your cash flow, eliminate coverage that no longer makes sense, and search for potential savings on policies available at better rates. At Fairman, we routinely connect clients with independent insurance agents who can review options in the open market and provide customized coverage for unforeseen events as their financial needs evolve. In addition to keeping you protected, an annual policy review can save you money, allowing for more future planning possibilities.
Keeping Your Estate Documents Up to Date
Your estate plans should reflect current laws and personal circumstances. Review your estate documents regularly, such as wills and powers of attorney, to ensure they remain current and aligned with your intentions. Our team always encourages full collaboration with your estate attorney to make any necessary revisions that will keep your documents up to date.
It is also important to check in annually with the individuals who play a key role in your estate. You want to make sure they remember where and how to access any necessary documents and whether their current situation still allows them to execute their assigned duties. If they’d like to transfer responsibility, identify other potential family members or friends who could step into these roles. Keep a running list of those individuals throughout the year so you are prepared in case an unanticipated change is required.
Just as you take proactive steps to improve your physical health, set aside time for a financial review to keep your finances working for you. At Fairman Financial, our job is to help simplify the process so you can be confident in your future.
About Fairman Financial
Fairman Financial is a fee-only financial planning firm located in Chesterbrook, PA, offering wealth management, investment advisory, tax and personal accounting services to individuals and families. Investment advisory services are provided by The Fairman Group LLC, an independent investment advisor registered with the Securities and Exchange Commission.
