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We get excited thinking through our new year’s resolutions and implementing these necessary changes to transform ourselves at the start of every year. The new year seems to hold magical powers, compelling us to make those lifestyle alterations to become a better version of ourselves. However, this enthusiasm and effort often slow down by February, are abandoned by March, and revert to old habits by April. Most fail to maintain their goals throughout the year, which can be very discouraging and often undermines future efforts to make positive changes.

New year resolutions are nothing more than a goal we set for ourselves. And while it is great to set goals, they are ineffective unless accompanied by a strategy or plan of action. To attain a larger resolution, it is important to break them down into smaller objectives. Clients, family, and friends often ask how to reach financial freedom, and, while freedom means something entirely different to everyone, here are a few ways to break your bigger financial goal into smaller, more accessible areas:

  • Budget
    • Not anyone’s favorite word, but the frequent reality is that financial success likely rests on having a detailed and dependable budget. It is important to review your financial plan with your Advisor, and if you do not have a financial plan, it is even more important to put one together with the help of an expert such as a CERTIFIED FINANCIAL PLANNER™. Part of this process is customizing a financial plan tailored specifically to your income, expenses, and investments. Having a definite idea of your budget helps allocate future personal income towards expenses, savings, investing and paying down debt.
  • Create an Emergency Fund
    • This fund should be a part of your financial plan and can be saved in a money market or savings account. Aim to save an amount that would fund three to six months of your ordinary living expenses. It is advisable to include this savings amount as part of our monthly expenses so that you never miss these funds.
  • Maximize your Employer Retirement Plan
    • Review your employer retirement plan (401(k), 403(b), etc.) to make sure you are at least contributing enough to receive what your employer will match. Then challenge yourself by increasing your contribution by 1% each year. Ultimately, once you have maximized the amount you can contribute to an employer retirement plan, you can then consider investing in an investment account outside of your retirement account. Set a plan to invest a certain amount every month and stick with it. Again, include this specific dollar portion of investing as an expense to ensure you stick to it. It is essential to consider investing with a longer-term mindset. Work with an advisor to create a reasonable portfolio allocation that can help you achieve your future financial goals.
  • Paying down debt
    • Many clients come to us with debt and are unsure where to start. It is critical to identify all your debt and develop a plan for how to pay it off over time. This plan could be to pay off the debt with the more significant annual percentage interest rate or focus on the smaller balances first and then work your way to the larger debt balances. Whatever strategy you choose, it is crucial not to forget to continue some level of retirement savings alongside eliminating debt. You can do both simultaneously, and it is paramount to have an achievable game plan!

Financial freedom, whatever that means to you, starts with the behaviors we create today, not on January 1st. We are all a work in progress, and implementing change is not something we should try once a year. To effectively goal set, it is helpful to reflect, celebrate, and improve your growth throughout the year. So, start now because there is no better time than the present moment. If you need help in one of the areas above, reach out to a Bridgeworth advisor who can aid in setting set you on the right track to your idea of financial success and freedom.

Bridgeworth Wealth Management is an SEC Registered Investment Adviser.

There is no assurance that the techniques and strategies discussed are suitable for all investors or will yield positive outcomes.

The information and material presented in this commentary are for general information only. They do not specifically address individual investment objectives, financial situations, or the particular needs of any specific person who may receive this commentary.

Investing in any security or investment strategies discussed herein may not be suitable for you, and you may want to consult a financial advisor.

Nothing in this material constitutes individual investment, legal, or tax advice. Investments involve risk, and an investor may incur either profits or losses.

Past performance should not be taken as an indication or guarantee of future performance.

This information is not intended to be a substitute for specific individualized tax and/or estate planning advice. We suggest that you discuss specific tax issues with a qualified tax advisor and consult with a licensed estate planning attorney for your specific estate plan.

Bridgeworth is now a part of Savant Wealth Management as of 11/30/2023. Savant Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois.