5 Ways to Help You Take Charge of Your Finances in the New Year

The start of a new year inevitably gets us thinking, “What can I resolve to do better going forward?” Health goals often top the list. (Who hasn’t committed to eating better or exercising more?). Yet, financial resolutions are just as important to your well-being.   

There are plenty of sources that will advise you on the most basic financial resolutions, like building up an emergency fund of 3-6 months of living expenses, paying off high-interest credit card debt, and contributing enough to your 401k to get the maximum employer match.

We’re going to assume you have bases like those covered. Instead, we will focus on 5 ways you can go beyond the basics and supercharge your finances this year.

1. Revisit Your Goals

January is an ideal time to reflect on how your life may be changing and what impact that might have on your financial goals. Perhaps you’re thinking about switching jobs or transitioning to an entirely new career. Maybe 2022 is the year you will start a family. A hot real estate market might have you looking to buy or sell a primary home or add a vacation property. Or you might feel now is the perfect time to launch your own business.

As your life plans and goals evolve, so will your financial needs. Take time to think about what changes may be in store for you this year, then talk with a financial advisor about how to adjust your financial plan accordingly.

2. Maximize Your Income

One of the most impactful ways to increase your retirement portfolio is to maximize your lifetime earnings by making the best career decisions. While it’s important to choose a line of work you find rewarding, there are ways to optimize what you earn while doing what you love.

This year might be the right time to ask for a raise (if you’re paid below market rates), position yourself for a larger bonus (if you can demonstrate value to your employer), take steps toward earning a promotion (by offering to handle new responsibilities), or move on to another company (for more advancement opportunities and a higher salary). Another way to maximize your income is to add a second income stream, which can come in the form of a side job or a rental property.

3. Reevaluate and Adjust Your Investment Portfolio

How you allocate your investments across higher-risk assets like stocks vs lower-risk assets like bonds should reflect your investing time horizon, risk tolerance, and risk capacity. When any of those factors change, it’s time to reevaluate your asset allocation and determine if adjustments are in order. For example, if you’ve taken on a larger mortgage or started a new business, or you are close to retiring, you might want to allocate a lower percentage of your assets to stocks to reduce your risk. Conversely, if you recently received a large salary increase or gained a windfall from an inheritance or stock options, you might have more capacity for higher risk and greater exposure to stocks.       

It’s equally important to rebalance your portfolio periodically to ensure it stays in line with your desired asset allocation. Your asset allocation can drift over time, especially when stocks perform well as they have over the past several years. The start of a new year is a good time to calculate how your portfolio is currently allocated across stocks, bonds, and other assets, then make tax-efficient changes to bring your portfolio back in line with your desired allocation.   

4. Make Sure You’re Being Tax-Savvy

Taxes can take a large bite out of your investments, so it’s important to reduce your tax liability using strategies that work best for your specific situation and goals.

For short-term tax savings, contributing the maximum amount to a traditional 401k or Individual Retirement Account (IRA) will reduce your taxable earnings in the current year. However, it’s important to assess whether a traditional or Roth 401k or IRA is the better choice for you from a long-term tax perspective. Factors such as your age, whether you expect your income to increase or decrease in the future, your anticipated Social Security benefits, and the makeup of your overall retirement portfolio all come into play when choosing between a traditional and a Roth retirement account.   

5. Protect What You’ve Worked Hard to Build 

Accumulating wealth and building up your assets takes time, commitment, and diligence. The new year is a good time to assess whether you’re adequately protecting what you have worked hard to build over time.

Insurance is one of the most important forms of financial protection, but we often put it on auto-pilot. Take time to review your policies and ensure the coverage limits are sufficient. If your home value has appreciated greatly in the current market, you might want to increase your property coverage. If you’ve started a family, you might need more life insurance to ensure your children are taken care of. If you have sizable assets, consider adding an umbrella liability policy for added protection.

In addition, be sure you have a will that reflects your current situation. Review the beneficiaries on your accounts and insurance policies to make sure they are still in line with your wishes. And if you have an estate that is very large or complex, a financial planner, together with an estate planning attorney, can help you determine whether your estate warrants more complex planning to ensure a smooth, timely transfer of assets.

For help implementing tips like these to take your finances to the next level in the new year, schedule a consultation with a fee-only advisor at Marshall Financial Group. We can help you revisit your goals, evaluate your portfolio to ensure it is allocated properly, and recommend practical strategies to reduce your tax liability now and long term.


Marshall Financial Group, Inc (“Marshall Financial”) is an SEC-registered investment adviser with its principal place of business in Doylestown, Pennsylvania.   This newsletter is limited to the dissemination of general information pertaining to Marshall Financial Group’s investment advisory services.  Investing involves risk, including risk of loss.  References to market indices are included for informational purposes only as it is not possible to directly invest in an index. The historical performance results of an index do not reflect the deduction of transaction, custodial, and management fees, which would decrease performance results. It should not be assumed that your account performance or the volatility of any securities held in your account will correspond directly to any comparative benchmark index.

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