Five Tips For Your End Of Year Financial Planning
/As we approach the end of a year that will forever be etched in all of us - now is a beautiful time to begin reflecting on your financial well-being and end of year financial planning. According to the Consumer Financial Protection Bureau, financial well-being is when an individual:
Has control over day-to-day, month-to-month finances
Has the capacity to absorb a financial shock (roughly $2,000)
Is on track to meet their financial goals
Has the financial freedom to make the choices that allow them to enjoy life
Financial well-being is a more holistic approach to measuring how well you’re doing financially, as opposed to solely looking at your income level. I believe this is the 21st-century approach to financial education and it is why Money & Mimosas is referred to as a financial well-being resource. Our membership trainings are created based on a holistic approach that allows an individual to define financial freedom for themselves and create goals in alignment with their personal values.
The three pillars of financial health
As a money mystic, I take my approach a step further. I believe money is energy, a spirit created by humans, that can be harnessed to expand the soul and elevate the experience for all of Earth’s beings. Therefore, while financial well-being is a progressive step forward, it only details one aspect of an individual’s financial health.
Similar to physical health, there are three pillars to financial health. Let’s look at physical health, first. Let’s say you have a fitness goal of running your first marathon in the New Year. In order to reach your goal, you’ll have to review three aspects of your physical health:
Exercises. In order to run a marathon, you have to train. Your workouts will need to include running and other forms of exercises on a consistent basis.
Nutrition. To prepare your body, you'll need to fuel it with wholesome foods and eliminate toxic foods that drain your energy.
Willpower. None of the above will work if you don’t do them. You can know all the right workouts to do. You can know all the nutritious foods to eat. But, if you don’t take action on the information, you will not achieve your goal. This is where willpower comes into play. It gives you the energy to implement the steps you need to take to achieve your fitness goal.
The same trinity can be applied to money. In order to reach your financial goal, you’ll have to review three aspects of your financial health:
Financial well-being. Similar to exercises for your physical health, your financial well-being is comprised of the action steps you need to take to reach your money goal. These action steps include consistently putting money into savings and investment accounts, and having a weekly money date.
Money mindset: Just like you need to fuel your body with wholesome foods, you need to feed your mind with rich thoughts. Learning how to shift from a scarcity to an abundant mindset is key to achieving the rich life you desire.
Money aura: Simply knowing the action steps to take to reach your money goal and reciting money mantras, is not enough if you don’t do them consistently. This is where your money aura comes into play. Your aura is your willpower. Nurturing and elevating your money aura will give you the energy you need to pursue your financial goals with ease and grace.
Five tips for end of year financial planning
Before the year ends, I highly encourage you to review your financial health based on the three pillars: your financial well-being, your money mindset, and your money aura. We all have room for elevation and by completing an honest assessment of yourself, you will be able to enter the New Year poised for financial growth.
Here are five steps you can take to assess your financial health and begin your process of financial planning.
Calculate your net-worth. Your net-worth equals your assets minus your liabilities. Your assets include the cash in your checking and savings accounts, investments, and so on. Your liabilities include credit card debt, loans, and so on. The difference between those two will give you your net worth. This calculation is a great numerical baseline for determining your current financial status.
Organize your bookkeeping. If you are an independent contractor, be sure that your books are up to date. This means reconciling all transactions, following up on outstanding invoices, and getting up to date on your bills. If you do not have a small business or side hustle, organize and review your financial documents such as health insurance plans and estate planning documents.
Set up a meeting with your tax planner. Most folks wait until tax season to talk with their tax professional. Unfortunately, at that point, you’ve missed out on some opportunities to reduce your tax liability. Schedule a meeting with your planner before the holidays to ensure you start the year off in the best financial position available to you.
Money mindset. Set aside some time to reflect on what thoughts have held you back this year. For many Money & Mimosas readers, these thoughts are related to perfectionism. Instead of putting themselves out there, they held back until everything was just perfect. Well, no situation will ever be perfect, so you might as well go for it. How have your perfectionism tendencies held you back this year? For more money mindset reflection prompts, join Money Makers and watch my 1-hour end of year financial planning video.
Money Aura. Have you been lacking the energy to pursue your financial goals? While this year was trying for everyone on some level, be honest with yourself if your lack of energy runs deeper than the impact of Covid-19. Establishing a spiritual connection with money and being disciplined with your money rituals will help heal and elevate your aura.
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Disclaimer: the content presented in this article is for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.
