HOME: Kick off the year with a clean financial slate

Kick off 2023 with a clean financial slate

By Bradley “Beej” Davis

Just a few weeks ago, we were retrieving holiday cards from the mailbox. Now, those season greetings and family updates have been replaced by credit card bills and 2022 tax documents making many of us ponder our financial plans for the new year.

“I think the beginning of the year is a popular time for people to look at their investments because it’s tax season and they start getting their year-end statements,” said Alicia Ahern, financial advisor for Ameriprise Financial.

Ahern said in addition to squirreling away those documents, it’s a great time of year to evaluate your financial health with a somewhat clean slate. The question is, what does that look like for individuals? Does everyone even need a financial advisor? One thing to note is financial health and planning aren’t relegated only to the wealthy.

“I think everybody needs to take a look at their financial health,” said Ahern. She added this can be anything from making sure you have a will or a power of attorney. Financial health should even be considered after death.

There are several questions people often ask themselves – or should be asking.

“‘Do I need life insurance? What happens if I die? What happens to my family?’ I don’t think it’s a venue for ultra-wealthy people, and it’s always interesting to me that people who accumulate assets aren’t necessarily wealthy people,” Ahern said.

Naturally, everyone’s financial position is unique. Some are blessed with family support, some started with nothing and worked diligently to lift themselves up to a different socio-economic status. Some are gig workers who may need some assistance organizing 1099s. However, there is one common thread to how we view money and finances: upbringing.

“Money is psychological to a certain degree. It’s in your head,” Ahern said. “It’s how you were raised. It’s how your parents spent money, it’s what they worried about. All of that filters down.”

Unfortunately, and too often, just growing up in a certain household situation doesn’t necessarily prepare you for the complexities of investing and planning for retirement.

“I do believe that in high school we should be teaching finance. We expect to come out of college, get a job and manage a 401(k) with absolutely no knowledge or experience,” she said.

It’s also no secret that the earlier one plans her or his financial future, it’s most often advantageous to have time on your side. It also doesn’t hurt to have someone you trust with your investments.

“Who do you trust? Are you getting ancillary advice? That’s just a clientadvisor relationship,” said Ahern. We’re all familiar with the adage “a rising tide lifts all boats,” and it’s the same with that aforementioned professional relationship. “It’s not about me making money, but you want your client to succeed because that’s how you succeed.”

So, it’s the new year, and we’re faced with our clean slate and 12 months of rate changes, market shifts and even the political landscape. While these factors are always going to play a role in how we plan, it’s crucial we get guidance to anticipate those ups and downs.

“I say this to my clients, and I don’t mean to be facetious, but I’ve seen the movie before and I know how it ends. I’m 37 years into this business, we know how the movie ends, we just don’t know how long the movie is,” Ahern said. And it’s proper planning that ensures the movie doesn’t end badly. “I’m always looking at a year from now because that’s really how you should invest. When you’re investing money, you don’t know what happens on day one. It could go up, it could go down, it could

Alicia Ahern of Ameriprise Financial says January is a great time of year to evaluate your financial health with a clean slate.

Photos by Kate Treick Photography

be flat.”

Ahern also stated that the government’s role also plays a hand in determining the state of your investments, notwithstanding of how it’s invested.

“I also recognize that the Federal Reserve is an appointed board and they have total control of the monetary policy, and so the government really has no control over that, and people don’t realize that,” she said. “Government sets fiscal policy; The Federal Reserve does monetary policy. Two entirely different things.”

Regardless of any and all of these dynamic factors, financial planning truly boils down to money in and money out. What are your expenses? Do you have an emergency fund? Are you diversified enough? It’s not always about how much money you make: it’s about how much money you keep. After a thorough assessment of your financial position, it’s then just a matter of creating and working towards a goal. These are the sails for a ship that can navigate inevitable turbulent conditions.

“First of all, you have to assess your risk tolerance,” said Ahern, adding that your timeframe and setting realistic goals are key pieces to the puzzle. “And if those things are in place, you can survive a downturn because you will have been managing what you have without emotion towards that goal.”

It can be argued that there are three pillars to maintaining a healthy community: physical health, mental health and financial health. When our community is healthy, everyone benefits. When wiping clean that slate with resolutions for 2023, remember financial planning can help everyone be healthy and happy.

Disclaimer: The views expressed in this article are those of a financial advising professional. Do not use this information as the sole basis for investment decisions; it is not intended as advice designed to meet the particular needs of an individual investor.