Let’s face it—money is hard. Few people relish the thought of sitting down to deal with their finances. It ranks right up there with dental visits, pap smears, and mammograms. Unlike healthcare, however, there’s no friendly reminder postcard urging you to get it done. It’s easy to procrastinate, and before you know it, years have passed without any financial planning.
Could things still work out despite the neglect? Sure, it’s possible. But chances are, something will go wrong, or you’ll miss opportunities to optimize your finances. And what does “optimizing your finances” mean? Let’s break it down.
1. Review Your Investments
Take a good look at your investments at least once a year. Are you overexposed to stocks? Underexposed? Stocks are the engines that drive long-term returns—just look at the S&P 500’s historical 10% average annual return over the past 20 years.
But too much of a good thing can backfire. If you’re too heavily invested in stocks, a market downturn might tempt you to panic and sell, locking in losses. Bear markets (defined as a 20% or greater drop from recent highs) are inevitable. The key is staying invested for the long haul to benefit from eventual recoveries.
2. Be Tax-Smart
No one enjoys watching 25–30% of their paycheck disappear into taxes. While taxes fund essential services, there are perfectly legal ways to reduce your tax burden. Here are a few strategies:
- Donate appreciated shares to a donor-advised fund to align your charitable giving with tax savings.
- Open a Health Savings Account (HSA) with a high-deductible health plan to deduct contributions directly from your income.
- Boost your Roth savings with strategies like a Backdoor Roth or Roth Conversion.
- Max out contributions to your 401(k), 403(b), or other retirement plans.
- Engage in tax-loss harvesting to offset gains and reduce taxable income.
3. Define Your Goals
Set your short-, medium-, and long-term goals—and write them down. Studies consistently show that writing down goals increases the likelihood of achieving them.
For example, one of my big goals is to own a home in Sonoma County—ideally in Sebastopol or Healdsburg—within the next five years. Having this goal in writing makes it more tangible and actionable.
4. Plan for Retirement
Think about when you want to retire—or when you’d like to leave your current job to pursue something more meaningful. This kind of transition requires thoughtful planning, clear goals, and detailed number crunching. The earlier you start, the better positioned you’ll be to make it a reality.
Why Start Now?
Every one of these actions underscores why procrastination is a financial mistake. Planning gives you a clear picture of where you’re headed and what you need to do to get there.
January is a natural time for fresh starts, so why not begin today? Whether it’s reviewing your investments, setting goals, or planning for retirement, even small steps can make a big difference. Take action now—your future self will thank you.
