It seems as though there is a “National Day” for just about everything. Obviously, there is Mother’s Day, which everyone knows. You also have some interesting “official” days such as National Lighthouse Day, National Happiness Day, or even National Donut Day (June 7, 2019 if you’re like me and curious when that occurs). Naturally, I thought we should celebrate today!  It is National Financial Awareness Day!

I might be biased, but this is one that deserves community celebration by educational events or at the very least, a conversation. What is financial awareness? In its simplest form, just being in the know about what is happening in your personal financial life; staying on top of things like your bank accounts, investment accounts, spending, net worth, etc. I’m going to share some tips to become more financially in-tune with what is going on in your world.

Bank Alerts*. If you are a smart phone or app user, this one is for you. If you have an app on your phone for your bank accounts, open that app right now and check your alert settings.

  • You can set the parameters to notify you when a charge of “$X”dollars is made on your card.
  • You also have the ability to know when any ATM withdrawal over a set limit has taken place.
  • You can even go as far as setting your alerts to send a notification every single time your card is swiped. Some might find this to be annoying, I think it is being financially aware. Not to mention, if that debit or credit card made its way into the wrong hands, you can swiftly take action.

*The available alert options are going to depend on where you bank.

Budgeting*. I know what you’re thinking… you would rather die than find out how much you are actually spending a month. I would compare starting a budget to the very first time you sampled wine. For me, I gave up and stopped drinking it as the taste was not for me (or so I thought). With time, that has most definitely changed. The tracking of your personal cash inflows and outflows can be intimidating – just as I once felt trying to pronounce “Sauvignon Blanc.”  There are a couple key points to help you successfully follow a budget.

  • It starts with methodology. It has to make sense, to you. If that means breaking it down by week, by pay period, or by month, find what works. Use a website, app, or spreadsheet that you will be able to access daily, if necessary.
  • Next, comes accuracy. Keep your receipts if you have to and if you are going to ballpark, I recommend rounding up. Once you have kept track of all of your spending for a month and have it documented, be sure to make adjustments for the following month. Don’t beat yourself up if it doesn’t go according to plan the first couple of months.

Set Goals*. Let’s assume that you already follow a budget and have been doing so for years. As time has passed and your income has gone up, so has your spending. You have several goals including: Retirement in the next five years, traveling during retirement, and downsizing your home. All of these goals are specific with dollar amounts assigned to them and years associated with them. After reviewing your financial plan, you aren’t happy with the outcome. According to the financial plan, you are in “good” shape, but what you want is to be in “great” shape – you want to meet all of your goals!

Based on everything that was entered into the plan, your financial adviser makes a suggestion to spend $3,000 less per year – to help you get from good to great financial plan results. If you take $3,000 divided by the 52 weeks in a year, it equals about $58 a week. Maybe you and your spouse go out for dinners quite a bit, so by removing one $50 dinner a week, with a 20% tip (total cost $60) out of your expenses you could hit those goals.

Beneficiaries*. Did you think that I was only going to talk about personal finance today?! Well, believe it when I say that financial awareness does embody estate planning (and tax planning which we will touch on next). Do you know who will get your money when you pass? Be sure to check all of your accounts and ensure that everything is set up the way you would like for it to be. If you have recently gone through a divorce, gotten married, had a child, or established a Trust, these are all life events that should encourage you to check-in on things. You shouldn’t assume that beneficiaries are set up, either. Some accounts such as a non-qualified, taxable accounts need some further documentation. Ensure that Transfer on Death (TOD) has been added if there isn’t a joint owner on your account. Maybe you have primary beneficiaries set up on all of your accounts – great! If there is just one name listed as your primary, perhaps consider adding a contingent beneficiary in case something happens to you and that primary person.

Tax Planning*. It is crucial to become your own record-keeper (or work with a group that will do most of this work for you). If you have an investment portfolio of Roth IRAs, Traditional IRAs, and some taxable accounts, you will want to know which accounts provide you with tax documents and if they are sent out annually, or only for distributions. If you take a distribution from any of your accounts, will they be taxed and penalized, only taxed, or no taxes at all? If you have successfully converted Traditional IRA money to a Roth IRA in the past (back-door method) how are these funds taxed? These are important questions to ask a tax professional and become familiar with if they apply to you.

I think I have achieved my goal of getting your wheels turning and making you more aware on Financial Awareness Day!  If you have specific questions regarding any of the topics mentioned, feel free to email or call our office.

Happy National Financial Awareness Day!

Heather Atkins, CRPC®