Episode 24: A Financial What To-Do in 2022!
Jan 26, 2022
We’re all about checking off a to-do list! On this episode, Isaac Wright, CFP®, ChFC®, talks with Ricky Lafon, MBA, CFP®, RICP®, about how a financial checklist can help you mark off key considerations for the beginning of 2022. They broke down some easy steps to get the ball rolling on being more financially aware for the new year.
- Consider looking back before looking forward.
- Identifying new life events on the horizon to help prioritize any excess cash flow.
- The importance of reviewing your employer benefits.
- Understanding the difference between tax preparation and tax planning…and much more!
Isaac Wright: Well, welcome back to Wright Money Tips for 2022. Been excited to launch a few new episodes. As you all may remember, I had the holiday message about just that and here we are. So, today we’re going to talk about how to get out of the gate effectively for your 2022 financial goals. And today we have our guest, Ricky Lafon.
Ricky is a Certified Financial Planner (CFP®) and a senior advisor here at Financial Dynamics and Associates. And really Ricky, I couldn’t think of a better topic to lead off 2022. You and I have talked about various ways that we can communicate with people, as like a checklist of ideas. And we have a little surprise at the end of the program today for all of those viewers and listeners out there.
But, glad to have you into the show today. More importantly, let’s make sure do a good job to tell people some things that they can look forward to when they start, let’s call it, building and completing those financial resolutions.
Ricky Lafon: Yeah, absolutely. You know, one thing that’s at the top of my mind is, “Can we look backwards before we look forwards? What worked last year? What was good? What are some good habits or routines that you can keep intact? And then look back at maybe things that didn’t work quite as well. And come talk to us about those things and we can assist with those areas.
Isaac Wright: You know, that’s probably a good thing to say, actually. If you all think about this, if you have financial goals for 2020 and maybe had similar or different goals, but you had some goals for 2021. You know, that’s really important. To look back and think about what positively worked, what built momentum that you would want to keep for 2022 as you start thinking about opportunities to increase or let’s call it, advance the ball, when it comes to your financial plan.
You know, I was sitting here thinking, I’ve had a couple of good things that happened over the course this show we started this past year, in a fashion on being able to add value. And you know, when we look at this checklist of items that we will cover today, we look back at 2021 and want to build momentum for 2022.
Let’s say that we start accomplishing that goal. What are some extra things that we want to take advantage of? So, everybody, kind of listen to us today. These are going to be just, we could sit her and talk for probably 45 minutes. I’m not going to do that. But just listen to what we have to say today. These are kind of checklist items that you would want to think about as you build some financial goals or reconsider, maybe some goals here for 2022.
So, Ricky, why don’t you just talk about anything else that we kind of covered before the program?
Ricky Lafon: Yeah, absolutely. You know, one thing that’s at the top of mind, as well are life events. Are you getting married? Is there a birth of a child, maybe a grandchild? Anything changing at your job? Maybe a pending retirement? All those things are going to affect cash flow and those are things that we need to talk about. So, if you’re not talking with an advisor, come talk to us about those things. We can look at your overall scenario and help you plan for those major life events that may be happening here in 2022.
Isaac Wright: So even though we look back, we want to build some positive things that happened in 2021. We need to also look at over the next 12 months, if there is a significant life change. So, for all of you, if you think about this, of course, especially maybe one thing that we’ve noticed, and of course we’ve had COVID for a while now. But you know, health changes has really spurred changes in how people may want to handle their finances or consider their lifestyle.
Some of the things that you mentioned, marriage, any large lifestyle change, retirement. These are, again, just very important things that you have to figure out whether or not you may have to change your finances related to those goals. And Ricky is right. I mean, we’re here to help you with any of the things that we’re going to talk about today, but regardless of whether you have an advisor or not, these are just going to be good checklist items, good points, bullet points, if you will, towards those goals.
Ricky Lafon: And let’s also talk about employer provided health benefits. Do you have the proper health insurance? Are you taking advantage of accounts like a health savings account or a flexible spending account if you have that available? Some people do have that at their jobs and they just haven’t taken the time to see what that is or how that can benefit them. And that’s part of our job. Come sit down and talk to us about those things so we can show you the tax benefits of having yourself fully covered.
Isaac Wright: When we sit here, and we talk to people a lot every day, do you find that people still to a degree, even though they they’re offered their HR departments, that they’re all at their offices and so forth, give them access to the benefits of the year that, that they still don’t sometimes follow through on maxing out their match or understanding what a health savings account is versus an FSA or a flexible savings account.
Just your opinion on this more importantly. Have you seen people, especially while they’re still working, but you know, they’re nearing retirement and they’re trying to do everything they can to make that a successful transition. Has that been, I won’t say problem, but have you seen that to be a shortcoming?
Ricky Lafon: Absolutely. You know, a lot of these benefits come out in the fourth quarter anyways, and time is just short for everyone. So having to sit and read the emails, maybe watch videos from an HR person, they don’t have a person to sit down and consult with to get benefits that’s customized to their individual situation. They may miss out on a lot of those benefits.
Isaac Wright: Yeah. That’s a really good point. As I think about this a little bit, of course, people immediately go to their investments a lot of times. And I want you all to hear me on this. So, when it comes to your investments, yes, if you’re not staying on top of your investments and what I mean by that is really having a general understanding of what you’re owning, this is a great opportunity. I would not say you have to worry about every individual stock that you have. This is more about, has your timeline changed? Maybe, is your portfolio something that you may want to start pulling from sooner versus later? Again, if you want a lifestyle change. Or maybe you’re in a place where, you know, the market’s had a really nice run here for the last couple years from the March lows of COVID in 2020, do you need to consider whether or not that run in your asset prices? Maybe you want to take a little risk off the table?
I’m not telling you to do that, but what I want you to realize is, that’s kind of one of the areas that I would say from an investment and from a financial planning standpoint, we can help you manage risk. You really should be looking at this. And I think the top of the year is always a good time to do it. But I’ll tell you one thing. In addition, it’s always nice and it’s kind of shiny to talk about the money you’ve saved. But what have you noticed about people with debt and debts? I think this is good for everybody to hear.
Ricky Lafon: Yeah. Even the clients that we work with. I mean, there’s always going to be large purchases and there’s always going to be a form of debt. Maybe they go out and buy a large lawn tractor or home renovation or something like that. Are they looking at what they’re paying as far as an APR? Is there a chance to consolidate that or refinance that? There’s a lot of opportunities out there in the market today. So, sitting down again and talking with us or your advisor. That’s going bringing a lot of value to that situation of ideas you may not have thought about.
Isaac Wright: Yeah. And I think a lot of you right now, if you think about sometimes the amount of debt you accumulate, maybe on credit cards or revolving. Imagine, if you could consolidate that debt maybe as like a home equity loan. Maybe you’re in a position of having a line of credit and all of a sudden your interest rate goes from 15 to 20 plus percent, down to three, four or five percent.
How much money could that save you? You know, when we talk about, you’ve heard me say this before, small hinges swing larger doors. Well, that’s exactly what budgeting does. And I think from a debt side of your equation, if you can save a few hundred dollars or maybe even a few thousand dollars a year in interest, that’s money back in your pocket.
So, again, if you have any of these resolutions, you’re welcome to talk to us anytime. These are things that we talk about pretty much 40 plus hours a week, if not more. But it’s good for you to have somebody to be able to have ideas and organization around some of these goals.
So now we have a couple more left here, Ricky. Taxes. Why don’t you talk a little bit about what we find this time of year when it comes to start building some momentum around that?
Ricky Lafon: Yeah. This was probably one of the largest areas that we need to talk about. And it’s more appropriate this time of year. Are you going to a tax preparation firm and having your taxes prepared? Or are you working with a CPA to actually do some tax planning, not just for this year, but for two, three years out into the future. We talk about saving money. That’s a great way of doing some tax planning to save you some tax dollars and reinvest in yourself. But you do need a professional to help you with tax planning. It’s not just taking your documents to a tax preparer.
Isaac Wright: Well, also too. Maybe not necessarily for those that are, do it yourself, or sometimes they may want to use the Turbo Tax software program, especially if they have a simple 1040. I’ve seen the commercials where people can get their taxes done for free.
What you said, I want to say one thing to reiterate what Ricky is telling all of you today, tax planning is different than tax prep. So, you’re going to start receiving your W-2s. You’re going to start receiving your 1099s. You’re going to have to start getting all of your summary statements together on any interest off of your home, things like this. Things that may be deductible, they may not be a deductible depending upon how much you can itemize.
But my question to you is this a lot of times is when you plug all of this, whether it’s in a software program or if it’s with a CPA for that matter, I think a lot of times there are caveats that can be playing before you get these 1099s. Because once you have these 1099s, like what you get right now are back from 2021. It’s typically too late to do the planning in a way. It’s like a scenario where you want to now take advantage of maybe going forward in 2022. And I would almost tell you to do this every year is look at it as, “What can I do now to proactively prepare for the end of the year, the first of 2023?” As you all get your tax forms and don’t get me wrong, you have to prep your taxes, but there’s planning that can be involved. And some of the software that’s out there today, Ricky, I don’t know if you feel the same, but the software is getting better. But there’s also loopholes where the software does not catch everything when it comes to some of the topics we’re covering today.
Ricky Lafon: Yeah. You’re exactly right. And you know, it goes back to the old adage, you get what you pay for. So, if we’re going to pay a small amount for a software package, expect small service and support behind that. May not be looking out for your best interests, always going to get a second opinion on it.
Isaac Wright: Awesome, man. Let’s talk a little bit about insurance. I think when we say insurance, I don’t want to put words in your mouth, but I feel like what we talk about, a lot of people, including yourself if you’re watching this, probably pay a decent amount of money on insurance, when it comes to almost all different lines of insurance. I’m not just talking life insurance, homeowners.
You may have a disability policy, may have long-term care insurance. The collective amount of money that goes in premiums, and a lot of people are having price increases, not to mention health insurance. And we actually had, if you haven’t checked it out, we had the program at the end of the year, 2021, about open enrollment and stuff. Because we’re realizing again, budgeting and especially when it comes to insurance, is to make sure that you’re properly covered. And then also looking at whether or not budgeting is something you can improve upon whether, you can save some money on these policies. What have you found really? I mean, again, you know, you serve and help us with a lot of clients here. What do you think?
Ricky Lafon: There are two big areas here. We can talk about home insurance and car insurance and let’s stop and talk about home insurance for a second. During everything that we’ve been through, we’ve seen home crisis. So, do you have enough coverage? If something was to happen tomorrow for your home? Have you done a review with your insurance agent to make sure everything’s appropriate on that side of the fence plus there’s liability coverage?
What if someone comes on your property? There’s an accident? Do you have enough to cover you? And that sort of parlays into auto insurance. If you’re in a car accident, whether it’s your fault or not, do you carry enough insurance to take care of you and your family or whoever else is in the car, properly? You know, your financial assets could be at risk if you are in a car accident. That’s the reason insurance is so important to be properly set up and you may even need an umbrella policy, a personal umbrella policy that has liability coverage over and above what your home and your auto would provide it.
Isaac Wright: Yeah, that’s great. I’m glad you said that because I know, we just increased our umbrella policy. You just never know, and somebody can slip and fall on your steps. But let me just say insurance is not necessarily how much more you can spend on insurance. It’s, in a lot of respects, it’s the opposite. Or if you’ve had a life changing event, again, if you’re getting married, if you have a child.
You know, you want to make sure that you’re covering those that you love. So, last but not least here are legal documents. Let’s kind of keep this simple. Ricky, I want you take the reins here. What do you say when it comes to legal documents?
Ricky Lafon: You know, do you have a Will in place? Do you have a legal team working for you? Do you have all your documents in place? And a lot of our clients do, which is great. But when’s the last time that’s been? Has it been three, four or five years? And what we’re starting to see is people say, “Yes, I have that in place.” They go and they store it and then they don’t review those documents. Well, life happens, things change, and those should be reviewed every two to three years to make sure those documents are appropriate.
And that also blends over into beneficiaries. You know, one thing we found this year is not just with financial accounts that we take care of, but bank accounts, checking accounts, savings accounts. Those all should have beneficiaries on them. And we’ve had several clients this year who had a spouse or a parent that passed, and the beneficiary wasn’t set up that creates some hiccups in the process. So, it’s always good to take time this time of the year to go back and make sure everything is set up properly. As far as beneficiaries, whether it’s a legal document or a financial account.
Isaac Wright: I don’t even think I have anything to add to that, man. That’s great. Basically, what I want to say and hook everybody is being able to take advantage of some of the things that we’re covering today. I do want to step back and just say one thing about this. Don’t let this overwhelm you. We covered a lot of topics here. We also have a checklist that we can email you. If you drop us a message or subscribe, I’m happy to send this checklist to you. We have personally developed an approach that I think would really help you if you really wanted to have a good checklist.
I know we covered some of the things today, but I want to make sure people understand that they can call and reach out to us. You know, I get passionate about this because I know how important it is. A lot of people are busier than ever before, or they’re just trying to figure things out because they’ve had a lot of lifestyle changes here over the last couple of years.
I hope this has been a great kickoff show for you to be able to listen in on, you can read, you can go to our Wright Money Tips website. Again, if you want to have a copy of our checklist. We’re welcome to send that to you. And Ricky, I think this is a good way to kick off the year. I know we sometimes take some of these things for granted, but for the listeners and viewers, I would say, these are probably the highlighted items that a lot of people know that they need to make progress on. And if you would like to make some progress, feel free to reach out to us. We’re happy to help. Have a good day. We’ll talk soon.
If you have any concerns or questions, you can visit wrightmoneytips.com to request some time on our calendar. Or please subscribe when visiting wrightmoneytips.com to receive notifications on new episodes, our newsletter, and even upcoming events.
Advisory services offered through J.W. Cole Advisors, Inc.
J.W. Cole Advisors, Inc., and Financial Dynamics and Associates, Inc. are unaffiliated entities.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.