Ask Jill:

Getting Your Financial Act Together for the New Year

A monthly Q&A with Jill Schlesinger, CFP®, host of the Jill on Money podcast

Disclaimer: Jill Schlesinger is an ambassador for Marcus by Goldman Sachs and has received financial compensation. However, all thoughts and opinions are hers.

Marcus by Goldman Sachs is the sponsor of the Jill on Money podcast, featuring Jill Schlesinger, a Certified Financial Planner, CBS News Business Analyst and author of the new book “The Dumb Things Smart People Do With Their Money”. Listen to her podcast on Apple and Stitcher.

The Scenario: New year, new you. 

The Question: What should I focus on for 2020 when it comes to my finances?  

Jill’s Take:

As the calendar rolled over to 2020, millions of Americans likely resolved to do something different with their lives. I’ll let you deal with your goals around diet and exercise, and instead will focus on three ways to get your financial act together in 2020. 

Goal #1: Track cash flow

The most common financial resolutions that I come across are to save more, spend less and pay down outstanding debt. I’m lumping them into one category, because each requires that you understand how much money is coming into and out of your household. 

I know it may sound simple, but if you don’t get this core concept right, it’s hard to make informed decisions about your financial life.

For example, how much money is really available for you to pay down your outstanding debt? Can you afford to put a little bit more toward your emergency fund so that you have 6 to 12 months of living expenses socked away? Can you afford to nudge up your retirement plan contributions?

Goal #2: Put your money on auto pilot

With your trusted cash flow in hand, make your life easier by using technology to manage due dates on bills and to establish auto pay on available accounts. The idea is to synchronize payments for recurring bills – like mortgage/rent, insurance, utilities, credit cards and cell phones – with when you receive income. If you are paying down debt, establish automatic payments, even for a small amount, so that your most important expenses get paid and you can avoid, or at least minimize, penalties and fees. 

If you are saving on your own, you can automatically transfer money from your checking or savings account to a Roth or Traditional IRA. If you are using an employer-based retirement plan, many allow you to automatically increase your contribution levels and also rebalance the account periodically.

"Of all the off-the-hook stupid mistakes you can make with your money, failing to have a will is indisputably the worst."

Goal #3: Embrace the unthinkable

Nobody wakes up on January 1 and says, “I want to contemplate my death,” but that is what I am asking you to do.

As I said in my book, The Dumb Things Smart People Do with Their Money, “of all the off-the-hook stupid mistakes you can make with your money, failing to have a will is indisputably the worst. Not only can it result in massive financial losses for your loved ones, depending on the size of the estate, but it can also cause them any number of other hardships.”

A will is a legal document that provides for your assets to be passed to your designated beneficiaries, in accordance with your wishes. In the drafting process, you name an executor, the person or institution that oversees the distribution of your assets and takes care of your remaining financial obligations.

If you have minor children, you need to name a guardian for them. This is where the process often breaks down, because it can be hard to agree on a suitable person for such an important role. Don’t let this stop you – make the best choice you can now and then you can always change it in the future.

Another important document to have is a power of attorney, which allows you to appoint someone to act as an agent on your behalf. With a valid power of attorney, the person acting on your behalf can take any action included in the power of attorney document, like withdrawing money from a bank, responding to a tax inquiry or making a trade. You’ll also want to consider a health care proxy, which allows you to appoint someone to make health care decisions on your behalf if you lose the ability to do so.

Although I prefer hiring an estate attorney to do a will the right way and in accordance with state laws, having something basic, like what’s available online, is better than nothing.

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.