A Year Behind Us
As we wave goodbye to 2020, we can all admit, it has been quite the year. Many of us leave this year with heavy hearts and many with new hope for the year ahead. Some of us lost people we love this year, whether to the Covid-19 pandemic or another, no less painful, claimant. At the same time, some of us experienced great joys in 2020 and will look back fondly on this year, no matter how strange it may have been. However you will say goodbye to 2020, now is the time to take stock of a year behind you and prepare financially for the one ahead.
- Income
Review your 2020 income. Did it change from the year prior in ways that were unexpected? Are those changes positive or negative and are they changes that are expected to persist into the new year? Now is the time to adjust your budget to reflect those changes. - Expenses
This one is really two-fold. First, take account of your unexpected expenses from 2020. This is potentially another place you need to adjust your budget for the new year. Did you add new subscriptions mid-year that never made it into the budget or was there a change in your prescription coverage that caused a medication price to increase or decrease? Any change that happened this year that will persist into the coming year should be adjusted/added to your budget. The second piece is large, planned expenses for 2021. After the year we’ve had, is this planned expense still realistic? If so, create a savings plan to be certain it still happens. - Legacy
This one may sound a little strange, but if 2020 has taught us one thing, it is to expect the unexpected. Review your legacy plan and make certain everything is in order should something expected happen to you. If you have a young family, this means reviewing your life insurance policies and increasing or decreasing death benefit amounts as necessary, having an updated will and plan for your minor children, and double-checking beneficiary information on all financial assets. If you no longer have young kids at home, this will likely mean reviewing beneficiaries, establishing Powers of Attorney if not already in place and creating a plan for your assets should you become incapacitated or worse. See my previous posts Whose In Your Corner and Women & Wealth Part 2 for more information on this. - Giving
December is a big month for charitable giving. As I mentioned in my previous post regarding financial scams, do your due diligence prior to giving to be certain your gift is going to a credible organization. Beyond charitable giving, many people gift to loved ones this time of year. Keep in mind, the IRS allows taxpayers to gift up to $15,000 per year per individual recipient with a lifetime exemption of $11.58 million. This is also the time to plan for the giving you’d like to do in 2021. I speak from experience when I say that setting giving goals is far more rewarding than setting income goals. How much do you hope to give in 2021?
With our year drawing to a close, there is still plenty to do to prepare for 2021. Take account of what your financial picture looked like this year and adjust for where you want to be next year. Although this was a strange, and for many, very difficult year, don’t forget to give thanks for all the good that happened. My prayer is that you can look back on 2020 with peace and forward to 2021 with renewed hope. Happy New Year, friends, from our family to yours!
Any opinions are those of Molly VanBinsbergen and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the forgoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making investment decisions and does not constitute a recommendation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
