Beacon Pointe Breaks Down How to Make the Most of Your Money This Year
Written By: Locale Editors New Financial Tips
Hello 2019! It’s the start of a new year, and we’ve all mentally piled up a list of goals, resolutions and wishes for the coming year. But following through with your New Year’s resolutions takes more than some good vibes and a new gym membership. Whether you’re looking to lose weight, learn a language, run a marathon or catch up on finances, it takes disciple, resolve and a plan of action. We spoke with Beacon Pointe’s Managing Director Brandt Kuhn, CFP® to find out what tips and tricks we can use to get our finances in order and built wealth in the new year.
New Financial Tips
Keep It Balanced
Still paying off your dream car? Picked up a new entertainment system for the man cave? You’ll want to notate all those purchases to have a better idea of what you owe as you go into the new year. “Use a Google Docs, spreadsheet or good old fashioned pad of paper to list what you own and the value on the left side, and what you owe and the value on the right side,” says Kuhn. “Knowing these values will help set your priorities when it comes to paying down debt or saving more.” Building a roadmap of what you owe will help you have a clearer picture of your finances as you go into the new year.
New Financial Tips
Add, Subtract, Calculate
Calculate your net worth every four to six months to have a clear cut outline of not only your personal finances but your soon-to-be-growing wealth! “Your net worth is the calculation of what you own and what you owe. Just subtract your ‘assets’ from your ‘liabilities’ and you have your net worth,” Kuhn explains. “Think of your net worth as a line in the sand, and building that number is the goal in the future.”
New Financial Tips
Track Those Little Transactions!
Did you Venmo your girlfriends for the after-work drinks? Use ApplePay to grab a coffee? Ordered lunch from the Postmates app? All those expenses add up, and with purchases made at the touch of a button, it’s easy to forget about everyday buys. Make sure to add it all up!
“Start with the regular monthly expenses such as rent or mortgage, car payments, insurance and utilities, student loan payments, etc.—anything that comes out of your bank account on the same day each month,” Kuhn begins. “Then, print off your three most recent bank or credit card statements, whatever shows your transactions, and grab a few different color highlighters to categorize your non-regular spending.”
Action Tip: Use a different color for each type of spending. Blue for food and dining, green for household spending, and transportation and travel in yellow to see problem areas at a glance.
Can You Afford It?
Getting ahead in your finances isn’t just about making colorful charts and easy-to-read graphs, the same way weight loss resolutions aren’t about having the right yoga pants. Making the best decisions for your financial future means making sure you can truly afford your purchases. “Keeping expenses manageable relative to your income can help keep your budget in line,” notes Kuhn. “Once you have categorized all your spending, divide each category by your gross income, that is the amount of money you bring in before taxes. Ideally, we like to keep housing expenses at or below 30 percent. Transportation should be around 15 percent. Groceries and dining, keep around 12 to 15 percent.”
Boost Your Retirement Savings
Planning for retirement can seem like a distant prospect when you have another 30 years before you even consider leaving the workforce, but with rising costs retirement can be more expensive than most people anticipate. Start saving now to build yourself a comfortable nest egg for the future. “Unexpected health challenges—not just you, but family members as well—layoffs, or economic conditions can make quick work of the best-laid plans for funding retirement through income alone,” explains Kuhn. “The current average benefit for a retiree from Social Security is around $1,400 per month which is $17,000 per year. But there is good news! If you have some time before you are planning to retire—like a decade or two—time is on your side!”
Action Tip: “Start saving for retirement in your workplace retirement plan, such as a 401(k), or a personal Traditional or Roth IRA. Save at least 10 percent of your gross income. If you are already contributing, increase your savings by at least 1 percent now, then again in July as well as each time you receive a raise.”
Insurance & You
When you start thinking about insurance, you have officially started to “adult.” Preparing for your retirement is great, but life insurance will take care of your loved ones who depend on you even once you’ve passed. “There are several different types of life insurance, all with their own unique pros and cons, but for many people, some plain, vanilla term life insurance will do the trick,” Kuhn explains. “If you have life insurance through your work, chances are it won’t be enough, especially if you have a family.”
Action Tip: “To find the appropriate amount, multiply your income by 10 and add $150,000 for each child for college. It could be a number in the millions, but don’t worry, most term life insurance will cost you less than a happy hour night out.”
Have a Productive Money Conversation With Your Significant Other
You and your SO are financial partners. Whether you’re starting a family, planning a family trip, hope to retire early or just want to get out of debt, it’s easier to achieve your goals when you’re working together. “Having a productive money conversation with your spouse can be difficult, especially when you are both on different pages financially, so commit to looking at the balance sheet, net worth and monthly transactions in a productive, non-accusatory way,” Kuhn explains. “I like to call it ‘The Financial 5th’ where the 5th of every month, we sit down to take a look at last month and plan for the previous month.”