After a year like 2020, it might be tempting to jump straight into 2021 and never look back. Last year, we all experienced massive disruption and change to our personal and professional lives, and everyone is eager to return to some sense of normalcy.
But moving forward without a clear picture of 2020’s impact on your life and finances will leave blind spots in your planning, and you may miss out on some important opportunities to course correct.
To create a firm foundation for financial success in 2021, we must look back to learn before we look forward to grow. Here are three steps to starting the year with a clear picture of where you are – so you can end the year where you want to be.
- Review 2020 Spending
While an annual budget review is always recommended, it’s especially important this year, since major spending categories may have changed.
“It’s hard to identify opportunities for investing, savings and other financial goals if you don’t know how you’ve been spending your money,” said Jerrod Ferguson, Vice President of Vance Wealth in Santa Clarita. “Knowledge really is power when it comes to your money.”
There are a few easy ways to get a clear picture of your 2020 spending. Most major credit card companies will provide annual spending reports with a detailed analysis. Jerrod also suggests using a budget tracking software or app like Mint.com. This can help you adjust your spending before it goes off course, rather than beating yourself up after missing a target.
- Set Personal & Financial Goals
At Vance Wealth, we let your dreams guide the course of our financial plans, so we start the year with a clear plan to your personal and financial goals, which may have shifted as the pandemic continues to impact our priorities.
“Last year reminded us that life is short and our time is precious,” Jerrod explained. “My wife and I knew we needed an estate plan, and after everything that happened last year, we moved up our timeline and made sure our estate was in order.”
When deciding your personal and financial goals for 2021, choose a few and focus on the ones that will make the biggest difference.
- Rebalance Your Portfolio
Rebalancing your portfolio allows you to take some risk and profit off the table, so you can plan for the next unexpected event. It’s a good opportunity to make sure you’re hitting the target allocation in your personal and retirement investments, which likely need attention after so much market volatility and change last year.
“Your target allocation is based on a number of factors, and it will be different for everyone,” Jerrod explained. “It helps ensure that your investments are in alignment with your goals for future spending and saving.”
Like your target allocation, your overall financial journey is unique, and it shifts and grows as you do. That’s why knowledge is power – and the power of 2021 depends on how well you understand the impact of 2020.
While these key steps set the foundation for a successful year, we believe a personalized financial plan is necessary to reach those goals. We encourage you to book a complimentary consultation with one of our Wealth Advisors by calling Lauren Fox at 661-775-0950.
Vance Wealth, Inc. (“Vance Wealth”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Vance Wealth and its representatives are properly licensed or exempt from licensure.