Updated: Jun 14
In 2021 many of us prioritized our health due to the shifting demands of Covid. We became experts on the workplace, travel, and health guidelines and restrictions. We adapted to changing mask requirements, became experts on vaccine options, and interpreted holiday gathering guidelines so they would work for our family. For many of us, Covid meant more expenses for home office upgrades, dining in, remodeling our homes, or finding new travel destinations.
When humans deal with the stress of a health issue, it is easy to let current spending and long-term financial planning goals fall to the back of your mind.
In my conversations with friends and clients, most had adapted to Covid. Most of us are going to be ‘OK’ even though Covid is truly horrible for some. And, being ‘OK’ means you will be on this earth for a long time and will have to confront financial reality whether you are investing in your business, saving for retirement, considering life insurance, or paying for your children’s college. This is a great time to take stock of your finances.
Begin 2022 with the mindset of prioritizing your financial wellness.
During the month of January, we will cover four topics.
Plug the Leaks in Your Expenses
Creating a Budget
Tracking Your Net Worth
How to Set Goals to Realize Your Dreams
Let’s start with something you can do on a rainy or snowy afternoon with a cup of coffee or tea. Iced tea if you are in a sunny locale.
Prioritize Your Financial Wellness by Plugging the Leaks in Your Monthly Expenditures
Paying your bills on time makes up 35% of your FICO score calculation, and automating recurring expenses is an easy way to make sure it gets done. But it is also an easy way to forget what you are spending your money on.
The month of January is a great time to reevaluate subscriptions or services you pay for monthly on a credit card. These run the gambit and may include:
Branded credit cards with points programs
Mobile phone service
Olive oil of the month club
Streaming video services like Hulu, Netflix, HBOMax, Disney+, and Showtime
Streaming music services like Apple Music, Spotify, and Pandora
Road I.D. for bicyclists
Data encryption services
Wine/Coffee/Tea of the Month Club
During January, I gather all my information for the year to prepare my income and expense report for the calendar year. As part of that process, I login to my bank and create my full year’s credit card statements. This report shows all of your spending by category for the calendar year. I challenge you to do that with at least one of your credit cards and try to identify one or more recurring charges that you can drop during 2022. After all, do you really need subscriptions to three different music services? Or can you live with one or two?
You’d be surprised how large recurring expenses can add up. In February 2021 Jerome and I learned we were each spending about $110 a month on cell phones with separate carriers. By combining our plan into one carrier, we reduced our bill to $90 a month. That is a savings of $1,560 each year.
I challenge you to see if you can save at least $1,000 during 2022 by eliminating or reducing some of your recurring subscription costs.
Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you.
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About the Author
Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind.
Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.