5 Financial Goals to Help Your Clients Grow

Shelley Yates, Senior Advisor, Communications
April 23, 2019

How long did your New Year’s resolutions last? If you’ve already abandoned yours, you’re not alone: only 8 percent stick with their resolutions past the first six weeks.1 Whether or not you or your clients set — or stuck to — your New Year’s resolutions, don’t overlook the opportunity spring provides to start fresh. Just as plants reawaken from the frigidity of winter to blossom into something better than they were before, your clients can also turn over a new leaf, set realistic financial goals and put a plan in place to achieve them. Consider helping your clients set the following goals for themselves this spring:

  1. Create a budget.

When was the last time your clients reviewed their spending or created a plan to control it in the future? It’s time for them to stop wondering where money went and start planning where it should go. There may be areas to easily reduce or reallocate spending, such as switching electric utility providers or reducing the number of Starbucks stops each week. A popular budgeting method is the 50/30/20 rule — 50 percent goes to essential needs (mortgage, utilities, insurance, etc.), 20 percent toward personal financial goals (saving for retirement, paying off debt, etc.) and the remaining 30 percent covers expenses that vary month to month (dining out, new clothes, gas, hobbies, etc.). Downloading a budgeting app like Mint can take the guesswork out of creating and sticking to a budget.

  1. Pay down debt.

Young, high earners are often carrying a large amount of debt, generally as a result of large expenses like student loans, that delays or prevents them from focusing on their financial goals. A good practice is to make a list of all debts and each balance’s interest rate. Focus on paying the highest interest debt first or, in the case of multiple credit cards with debt, it may make sense to consolidate debt onto the card with the lowest interest rate.

  1. Maximize tax advantages.

The term “tax-advantaged” refers to any type of investment or account that is either tax exempt, tax deferred or offers other types of tax benefits. Traditional Individual Retirement Accounts (IRAs) and 401(k)s defer taxes until distributions, or age 70 1/2 when required minimum distributions (RMDs) must be taken. Distributions from Roth IRAs are tax-free, including earnings, if held for five years and the investor has attained the age of 59 1/2. (Withdrawals of taxable amounts will be subject to ordinary income tax, and if made prior to age 59 1/2, may be subject to a 10 percent IRS tax penalty.) Health Savings Accounts (HSA) grow tax deferred, and withdrawals from these accounts are tax free if used to pay for qualified health care expenses. Leveraging tax advantages can put more money in your clients’ pockets — now and later.

  1. Automate savings.

By creating a budget and paying down debt, more opportunity is created to save for what matters. Unexpected expenses can happen at any time, which is why it’s so important to set aside money for emergencies. Saving for emergencies provides excellent practice for increasing savings as a whole, particularly for personal financial goals like travel, starting a business, children’s education and retirement. Saving and investing are made infinitely easier if commitment to making systematic, ongoing payments is made. Urge your clients to set up automatic, recurring transfers from their checking accounts to savings and investment accounts.

  1. Increase knowledge.

Whether it’s reading a personal finance book or learning a new skill outside of work, investing in knowledge and financial education can help investors in a myriad of ways. Suggest that your clients take a continuing education course at a local college, sign up for a masterclass on a subject that interests them or attend a seminar you host. Knowledge-increasing endeavors like this make them more equipped to increase savings and advance their careers. Knowledge is power — and can enable financial freedom.

Clients not sure where to start on their financial goals? As their financial advisor, you can look at their entire financial picture and create a custom plan to help them reach them. Whether their goals include saving for children’s education, making an estate plan, taking a trip abroad or simply saving more money, you are their best resource to help them nip bad financial habits in the bud and sow the seeds to financial success.

1Norcross, John & J. Vangarelli, Dominic. The resolution solution: Longitudinal examination of New Year’s change attempts.