The New Year is a great time to reexamine finance goals, and budgets and make positive adjustments with a fresh perspective.

Finance Goals

Consider what you hope to achieve in 2022, and create a reasonable timeline and budget for each goal. Then work backward to plan how you can achieve each goal in the desired timeframe. For example, if your goal is to save $3,000 for an overdue vacation in June, start saving $500/month now!

Put Legal Documents in Place

Documenting your wishes in a will is important if you have a lot of assets. A trust may also provide your estate some protection. In our new COVID world, having a Health Directive and Power of Attorney is prudent, and relatively easy. Many attorneys will provide an initial consultation for free.

Budget Tracking

Given many of us use credit and debit cards to pay for expenses, a number of these banks offer tools to summarize your annual expenditures by category. Review your 2021 annual report and see if anything stands out. If you notice your meals and entertainment budget is higher than you expected, see where you can trim without hurting too much – perhaps reduce your take-out food or make coffee at home more often?

Review your Subscriptions

Are you paying for a gym membership but you’ve only gone to the gym twice in two years? Do you have a subscription to Netflix, Hulu and Disney+ but really don’t utilize all three? Automatic payment may be your downfall!  Review what you’ve set up and see if it still makes sense.

Pay Yourself First

When I got my first real job, my dad reminded me to “pay myself first.” Take a little out of each paycheck (10%) and put it aside for savings BEFORE you pay your rent/mortgage, utilities, car and entertainment expenses.Contributions into an employer sponsored retirement plan (i.e.: 401k) are deducted directly from your paycheck and would reduce your taxable income, too.  However, if you don’t have an employer sponsored plan, any savings vehicle will do.

Start Investing

After setting aside three to six months’ worth of living expenses in an emergency fund, examine your excess savings and consider if your money can work harder for you. The bank is paying hardly anything these days. Perhaps your excess cash can be invested in a prudent manner that will yield you market rate of returns.  Only take as much risk as you feel comfortable with, and delegate this to a financial planner unless investing is a side hobby you enjoy.

Happy New Year! I hope 2022 brings you good health, new opportunities, joy, and prosperity!The opinions expressed above are solely those of Kondo Wealth Advisors, Inc., (626-449-7783 info@kondowealthadvisors.com) a Registered Investment Advisor in the state of California. Neither Kondo Wealth Advisors, Inc. nor its representatives provide legal, tax or accounting advice.