The year 2020 is almost here. It’s time to plan our New Year’s resolutions. You don’t need New Year’s to do financial planning, however, the beginning of the year is as a excellent time to review financial goals and improve our habits.
Any upcoming life events that require you to make changes to your financial goals, like having a baby, getting married or retiring? Revisit your goals and modify for new plans.
Go to your financial planner before year-end to do tax planning. That may involve selling long term securities with capital losses to offset capital gains in order to reduce your upcoming tax bill.
Unplanned events such as sudden job loss, illness or surgery for your pet are fairly common. Plan your emergency fund for six months or more as your goal.
4. Net Worth And Budget Are Key Tools To Measure Wealth
Net worth is a snapshot of your financial condition. It is calculated using total assets, that is, what you own less total liabilities, or what you owe.
Total liabilities are what you owe based on your debt obligations, notably the balances on your credit card debt, mortgage, car loan and any other loans you have.
Net Worth Ratio = Total Assets Less Total Liabilities