Why you don’t have to have all the answers before getting started
Now that it’s 2019, it’s a great time to evaluate your financial goals and develop a plan to get where you want to be. While there’s never a bad time to start your journey toward meeting your financial goals, a new year (with all the resolutions that go with it) happens to be a perfect time to take the first step.
One of the most common misconceptions that people have is that they need all pieces of their financial situation to be settled before they engage an advisor, or that everything needs to be in place before they start to develop a plan. That is far from the truth.
You’ll never have every single component that could affect your financial plan settled – that’s just not how life works. That’s why it’s important to create a flexible plan based on your major goals than can adapt as your situation evolves.
Think through your most important life goals. Do you want to buy a house? Retire? Fund your children’s education? Even though the inputs that will determine exactly how and when you do those things will evolve, the chance that you abandon those goals altogether is highly unlikely.
In fact, the earlier you begin planning and working towards your goals, the easier it will be for you to achieve them. Here are three things you can do to get started on the path to achieving your goals TODAY:
1 - Start defining your financial goals. What’s the first step in achieving your financial goals? Figuring out what your financial goals are, of course. There are no one-size-fits-all goals, so you’ll want to think through what your biggest priorities are. For some people these goals come to mind easily, whereas others may need some time to reflect on what’s important. Don’t pressure yourself to rush decisions about your goals – they’re worth spending some meaningful time and thought on.
2 - Take an inventory of your assets (and debts). In order to figure out what you need to do to get from point A to point B, you need to know where point A is. That means having a complete picture of your income, your savings, and your debt. You’d be surprised how many people overlook the importance of understanding their starting point. Some items to consider:
Checking and Savings accounts
Treasury or Savings bonds
Investment and retirement accounts
Educational, auto, home or personal loans
Existing credit card debt
Employer deferred or stock-based compensation
3 - Check your credit report – One of the easiest things you can do is to review your credit history from each of the three credit reporting agencies annually (Experian, Equifax, and TransUnion). The Fair Credit Reporting Act mandates that they provide free access once a year through AnnualCreditReport.com. The reason this is so important is that credit history affects not only the interest rate on any debt you may have, but also your ability to get a loan, rent an apartment, or (depending upon what state you live in) how much you pay for home and auto insurance. In other words, it’s important to make sure the data they have is accurate, and also to be informed about how your credit history will affect your ability to achieve your financial goals.
If you’re eager to get started achieving your financial goals but aren’t sure if it’s the right time, try starting with these three items above. Even if there are other aspects of your financial life that are still in flux, you’ll have taken the first step – which is the hardest part.
And as always, Paceline is here to help if you ever have questions.
This blog was written by Jeremy Bohne, Principal & Founder of Paceline Wealth Management. Paceline is a fee-only investment advisor serving clients in the Boston area, and on a remote basis throughout the country. Paceline specializes in helping tech and biotech executives, physicians, and those seeking financial planning services.