Shining a spotlight on financial well-being

As the first month of 2024 comes to a close, advisors are spreading awareness and educating clients – and each other – on the importance of financial well-being.

Even though January is a gloomy start to the year, it also marks Financial Wellness Month, and several advisors say that it’s the perfect time to catch up on budgets, financial planning and making financial goals for the year.

One of the tried-and-true money management techniques, said Andrew Herzog, certified financial planner at The Watchman Group in Plano, Texas, is to "pay yourself first.

“Make sure your money flows toward your goals and ambitions first, before it goes flying out the window to other things in life, and make sure you're saving for short-term and long-term goals and giving your money the chance to work for you,” he said.

An approach to doing proper financial planning, says Lori Van Dusen, founder and CEO of LVW Advisors, an RIA, “is starting with a clean sheet of paper and figuring out what your goals are … having a budget, setting aside emergency funds and understanding your liquidity needs.

“Once you've done that, and you figure out your own financial goals, it's really about putting a portfolio together that matches that or has a higher probability of success than just collecting investments or randomly investing in things,” Van Dusen said.

On a personal note, Herzog said that he enjoys opening accounts on his phone, such as for his 529 plans, his Roth IRA and emergency savings, monitoring them, and verifying that deposits were made and that large expenses have been paid, like housing and car loans. “Those are some of my regular check-ins with myself,” he adds.

Herzog recommends that people do a check-in with their own balances roughly once a week.

“That's the idea here, is through your phone, it couldn't be simpler and more convenient to just give yourself a quick checkup,” he said. “In today's world, money goes a long way, it gives you options, and it allows you to thrive or just barely survive. It’s very important to know all the different accounts you have and credit cards and just staying on top of it all. It doesn't have to be overwhelming but that is the healthiest thing to do.”

Another priority, said Katherine Edwards, a certified financial planner at Mainstreet Financial Planning, is to beef up emergency funds so that they cover at least three months’ worth of expenses. For single clients or those who have children or an unsteady income, it’s best to have closer to six months’ worth, she said.

“A great place to start is making sure you have an emergency fund and a handle on your budget so you can be sure you are on ‘track’ with either paying off debt or saving for retirement or other goals you may have,” Edwards wrote in an email.

“Everyone's getting ready for tax time now,” said Bill Van Sant, executive vice president and managing director at Girard, a division of Univest Wealth. “It's a great opportunity, in January and February, to really sit down and look and say what was accomplished last year financially? Were there obstacles in the way? What are some things that are causing stress in the in your own life and how do you tackle that?”

As for checking in with clients, Van Dusen says that it can be on a case-by-case basis depending on clients but that it’s important to be proactive with them. “We regularly check in with all clients in the way in which they tell us they want to be informed or kept up to date.”

Van Sant says the theme really comes down to having control over one's finances and knowing there’s a plan. “It may not make them the richest person in the world, but it gets them comfortable,” he said.

Advisors should ensure that there’s also an extra plan for their clients in case life throws a curveball such as unexpected changes, a job loss or even a death, Van Sant added.

“Being in good financial health is having a pulse on your situation,” Herzog said. “Knowing what's coming in and what's going out. Being fully tuned in to your wealth and giving every single dollar a job to perform, whether it's savings, debt reduction, bills, or enjoying life.”

January “is a good opportunity for folks to be proactive and really try to understand where they are at now,” Van Sant said, suggesting that clients make “a couple of goals that they're looking to accomplish for the year, whether it's paying down debt, increasing their savings … but, more importantly, coming up with a plan to do so.”