New Year, New Plan: Action

Part 3

The New Year is almost here! We’re about to welcome in 2017, and with that comes our New Year’s Resolutions. Resolutions can be anything from losing weight, calling your mother more often, getting a new job, and for many saving more money. Out of those who made a financial resolution to save more last year, 51% report feeling better about their money according to Fidelity Investments. So, what’s the best way to kickstart a new savings plan? Let’s start by making your money more efficient and effective.

Step 1:

Have full replacement protection. Make sure you are replacing your entire life value when it comes to protection. You can’t fix a mistake in this area after the fact. Without proper protection all other wealth is vulnerable to loss.

Step 2:

Save 15% of your gross earned income. Without this savings, you’re vulnerable to wealth eroding factors like taxes, inflation, market changes, and more.

Step 3:

Build liquidity. Have at least 6 months worth of income. This helps you operate on a cash basis with unforeseen events, opportunities, and rising interest rates. This step also helps you to stay out of debt and keeps you consistent with all other strategies.

Step 4:

Avoid compounding tax interest. This will substantially erode your wealth. Talk to your Leap Adviser to learn more.

Step 5:

Contribute to retirement. First, contribute up to your employer match portion. Then, consider diversifying into other assets that provide a more advantageous tax treatment. Make sure you contribute no more than half of your gross annual savings rate to qualified plans. This keeps you flexible for distribution options when you need income and access to capital throughout your life.

Step 6:

When you start to look at growing wealth consider becoming a lender. You might consider income producing assets such as Government, Corporate or Municipal bond or bond funds.

Step 7:

Be an owner. Consider becoming a shareholder through the ownership of stock. This allows you to participate in the potential profitability of companies through capital appreciation and dividends. There is also the potential for capital gains treatment of these assets which can provide tax diversification.

Step 8:

Own hard assets. These will provide opportunities for income and growth while providing tax benefits. This includes real estate, business ownerships and investment property.

Step 9:

Maintain, balance and monitor your financial life. You'll need to periodically re-balance to adjust for the changing circumstances in your life and the economic world around you.

Lastly, find a Financial Adviser. 36% say they want to get their finances in order and that working with a financial planner would most improve their life. Find a Leap Adviser who understands and fits in with your lifestyle.

Happy New Year!