Five Financial Best Practices for 2021

We’re pretty sure that all of us are looking forward to making a new start this year. Here are five financial best practices for the year ahead, to make sure you’re shipshape and ready to roll.

Pick a few of them or take on the entire list – it’s up to you. Either way, you’ll be that much further ahead by the time 2022 rolls around.

1. Do nothing

If you have a well-built financial plan in place, guided by a relevant investment strategy, your best move in hyperactive markets is to let that plan be your guide. That often means doing nothing. Yes, really! We list investment inaction as a top priority, because “nothing” can be one of the hardest things to do when the rest of the market is in perpetual motion. Remember to #StickWithThePlan.

2. Double down on your financial planning

That said, a “do nothing” approach to turbulent markets hinges on having that relevant financial plan in place to start with. A fresh new year can be a great time to tend to your family’s financial plan – or create one, if you’ve not yet done so.

Have any of your personal goals changed, or will they soon? How might this impact your family’s future finances? Are you unsure where you stand to begin with? It’s time well-spent to periodically ensure your financial plan remains relevant to you and your personal lifestyle goals and objectives.

3. Prepare for the unknown with a rainy-day fund

Time will tell whether 2021 markets turn out to be friendly, foul, or (if it’s a typical year) an unsettling mix of both. Having enough rainy-day reserves to tide you through any rough patches is best practice no matter what lies ahead. Knowing your short-term spending needs are covered should help with the practical, emotional and behavioural challenges involved in leaving the rest of your portfolio fully invested as planned, even if the markets take a turn for the worse.

4. Redirect your energy to contributing financial factors

While you’re busy staying on course with your financial plan, you can redirect your attention to any number of related financial and advanced planning activities. While you don’t necessarily need to act on everything at once, it’s worth reviewing your financial landscape annually and identifying areas in need of attention.

Maybe you’ve got an estate plan that’s no longer relevant. Perhaps it’s been too long since you’ve reviewed your protection needs, or you’d like to revisit your philanthropic goals. Refreshing any or all of these items is likely to contribute more to your financial success than will fussing over the stock market’s daily gyrations.

5. Have “that money talk” with your kids, your parents, or both

Speaking of your kids, when is the last time you’ve held any conversations about your family wealth? It’s never too soon to begin preparing your minor children for a financially literate adulthood.

As they mature, their financial independence rarely happens by accident, with additional in-depth conversations in order. Then, as you and your parents age, you and your kids must prepare to step in and assist if dementia, disability or death take their tolls. There also can be ongoing conversations related to any legacy you’d like to leave as a family. For all these considerations and more, a regular “money talk” can be critical to successful outcomes.

So, there you have it: Five creative ways to bolster your financial well-being while the stock market does whatever it will in the year ahead. While this list is by no means exhaustive, we hope you’ll find it an approachable number to take on.

So, be it resolved for the year ahead: next time you find your stomach tightening at the latest frightening or exciting financial news, tune it out. Walk away. Go and do something you love, with those whose company you cherish. Circling back to our first call to inaction, not only will this feel better, it’s likely to be better for your financial well-being.

Above all else, remember what your money is for: money is meant to fund your moments of meaning.