Before we get into it, I have a couple updates.
- AllStreet Wealth is currently still taking on clients. Fees start at $450 a month and scale up based on complexity. Currently booked through February. If interested,?book a meeting to see if it would be a good fit!
?I may hit my capacity by the end of this year, so don’t wait too long!
- This newsletter is going to change slightly this year. I will be cutting down on some areas to make sure this is to the point and most impactful. I will only have the original blog post, top articles/content I consumed this month, and then links to all my new content I created. Hope you continue to find value and love this newsletter. If you have any requests or thoughts, let me know!
Anyways, let’s get into it. This month I am going to teach you how to make your own basic financial plan that you can do yearly if you want to on your own. January is always the best time to get started and plan for the year.
- Calculate your net worth.?You do this by subtracting your liabilities (what you owe) from your assets (what you own). This is something you want to do at least yearly to track and ensure you are making progress.
- List out all the goals you are planning for. Some common one’s I see: spend $x on travel, save for kids college, retire at x age, etc. Lay out all your goals so you can come up with a plan on how to get there.
- Come up with a cash flow plan. I am a big believer in reverse budgeting. Give this a try yourself. Let’s say you make $15,000 a month. Figure out what your fixed costs are, what your needs are, etc. Then subtract that number from your income. So if your expenses are $10,000, that means you will have a $5,000 surplus. Your next step is to figure out where that should go (hint: look at your goals above). Then automate this all and let it manage itself.
- Now after doing step 3,?figure out your total monthly spend and compare that to your emergency fund. If you spend $15,000 and feel comfortable with a 6 month emergency fund, then you need $90k saved. Compare that to what you have to see if you need to save more to get there. You should be reassessing your emergency fund needs yearly.
- Review your insurances. Do you need more life insurance? Did you get a new job and no longer have disability insurance? Is now a time to get more coverage on home, auto, etc? Do you need to get umbrella insurance? Review this every year and make sure you are properly covered.
- Review all your investments.?Do you believe in all your investments? Did you make bad investments that is finally time to get out of? This is a good idea to do every year. Make sure you are still investing the right way. But be careful to not just make changes every year based on what did well last year. Rarely does that asset class come up on top again. Be smart. Make long term investment decisions.
- Review or Get Your Estate Planning Done.?I can not reiterate this one enough. You need to make sure you have your estate planning documents done. ANd you need to make sure you are updating them as you move, get new assets, have more children, etc. Make sure it is up to date!
There’s more you could do, but this is a good majority of what needs to be done! Do this yearly and you will be really happy.
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I have been consuming so many Lex episodes, and this was one of his best ones. He really calls out Destiny on some of his language and the wrong things he does that can lead his younger audience astray. I think we all can learn to be more empathetic and to treat others better. (also he has one with Coffeezilla about FTX and that is also worth listening to).
This last year was wild in the markets. It was also one of the first recessions millennials faced with real money in the market. This means there is a lot we can learn from it. Michael kills it with this post! My favorite quote was “Diversification is the only answer to an unpredictable future. If everything is working, you’re not really diversified.”
People ask me this question all the time and what the differences are. Here is some hard data on what they are doing with their money!
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Start this year off strong!
