As autumn slides over into winter and decorations announce the start of the holiday season, it is hard to avoid the impulse to take stock of the highs and lows of this past year. 2021 has been a mixed bag perpetuating many of 2020’s struggles, relieving others, and introducing a few of its own. It was not an easy twelve months and folks felt the squeeze on diverse fronts. Mental health and economic insecurity continue to be the predominant hurdles and so with the hope of helping our clients end the year on a high, we thought we’d take the opportunity to provide the following guide to financial organization.

The Fast-Track Guide to Financial Management

1. Build a Budget
The most important part of successful money management is controlling cash flow (both in and out). Your budget does not need to be complex; it just needs to be complete, and you need to stick to it. At the most basic level, you should track how much you take in after taxes, how much you spend, and how much you save. Upon this basis, you then want to calculate how much you need to cover your fixed expenses and how much you will put away for the future. A comfortable retirement generally requires that you begin saving 10-15% of your pre-tax income while still in your 20s. If you start later, you will want to add 10% for each missed decade.

2. Gain Control of Your Debt
Having debt is fine—even useful—but only if you are in control of it. Your total monthly debt payments should not exceed 35% of your pre-tax income. If they do (or even if they don’t), devise a plan to begin paying off high-cost, non-deductible consumer debt as quickly as possible. Take advantage of a low-rate home equity loan or line of credit to consolidate your debt and make chipping away at it a part of your budget.

3. Invest Wisely
Stories about crypto-millionaires and amateur investors getting rich off of Reddit-driven short squeezes can tempt even the most level-headed investors into toying with risky strategies. While there’s a thrill to joining the fun, the fact is that doing so is akin to gambling. Success stories make headlines; personal bankruptcies do not. Instead, set a targeted asset allocation of stocks, bonds, and cash that lines up with your risk tolerance and financial goals. Stick to it even in down markets and couple this with strategic use of tax-advantaged accounts such as IRAs.

4. Organize Your Estate
You might be surprised to learn that planning your estate plays an essential role in financial management and yet the task is indispensable. An estate plan is much more than a Will and Final Testament. It is a roadmap to ensuring you meet your retirement goals, are able to confidently afford the long-term care you may need, and have strategically planned to maximize the inheritance of your beneficiaries by minimizing taxes and avoiding unnecessary fees. What’s more, an estate plan provides the legal tools to ensure your health and finances are properly cared for should you suffer incapacitation while still living.

To learn more about the details of executing a secure estate plan or to address any other matter related to reigning in your finances, do not hesitate to reach out to the Deliberato Law Center either by calling our office at (216) 341-3413 or using the contact form on our website. 


Contact the Estate Planning Attorneys at Deliberato Law Center