Plenty of people make New Year’s resolutions. They might pledge to lose weight or exercise more, yet it’s their personal finances that are often in poor condition. Budgeting advice could fit into your practice in unexpected ways. It’s an ideal seminar or client appreciation lunch topic. It’s a great reason for clients to introduce you to the next generation. It could possibly be packaged as an advisory service.
Here are 20 things your client should be doing differently in 2020:
Complete or Update Your Financial Plan: You need a roadmap. There is no GPS system or navigation app on your smartphone for retirement.
Pay Yourself First: Many clients consider savings when they look at what’s left from their paycheck. It should be the other way around. Money that comes out of your paycheck, like 401(k) savings, is a good example.
Get Everything That’s Coming to You: According to CNN, 66 percent of Millennials have nothing saved for retirement. If their company matches contributions to some extent, it’s foolish not to take advantage of their largess.
Employee Stock Purchase Plan: ESPPs can be a great deal. Some companies even give a 15 percent discount! Even if you liquidate your shares at the first opportunity, it’s a form of forced saving.
Write Everything Down: Weight loss programs do it. If you must record what you spend (or eat) you are more aware. You think “Did I really need to spend this?” Most people have no idea how much they spend. Your client likely does this.
Move to a Cash System: When you go out for drinks or meals, you pay with a credit card. It’s abstract. Want proof? If you use EZPass, you breeze through toll booths. Do you know how much you spent? No. Paying cash for drinks and out of pocket expenses makes you more aware of what you are spending. You either run out of money or need to visit the ATM.
Eliminate Automatic Debits when Possible: It makes sense for health insurance. Your gym membership might require it. If you have lots of auto debits for media service providers, wireless service and charitable contributions, a big chunk of your paycheck vanishes before you ever see it.
Charities Get Checks: Your deduction picture might have changed, but you should still keep records. Putting cash in the collection basket after religious services is a good example. You want a record showing the cumulative amount you have generously given away. Credit card statements are OK too.
Make Suppliers Compete: Few people shop for auto and home insurance. Many stick with the same wireless company. They love clients who pay what they are asked! Shop around at least once a year. Calling and letting them know you’ve found a better price will often get a reduction.
Credit Card Interest: You tell clients not to carry revolving charge card balances. They do anyway. They might be paying 17 percent! Suggest they shop around. Another card might give them a low rate if they transfer their balance from another card.
American Express. The plain vanilla AMEX card must be paid in full every month. Suggest your client lock up all but one of the other cards (Costco only takes VISA) and put most of their charges on the card that must be cleared every month.
Plan Vacations: Some people approach holidays thinking, “Where should we go next week?” Other people get dozens of e-mails from sites like airfarewatchdog.com telling of cheap fares if you book months in advance. Nail down the bargains ahead of time.
Use Miles and Points: Almost every business has an affinity program. Airlines award miles. and hotels give you points. Sometimes, it makes more sense to use miles instead of buying an airline ticket, especially if it’s one way! This can reduce vacation travel expenses enormously.
Review Account Statements: Clients should really review their credit card statements. Sometimes, bogus charges pop up. I’ve found the card company is great at taking them right off because they know you are paying attention.
Get Rental Car Insurance: Your credit card likely has a feature if you are renting in the US. It usually doesn’t work overseas. Your credit card company might have a separate policy you can buy to cover you for that short period. It’s usually cheap and money well spent. Rental car counters charge a fortune.
Health Insurance When You Travel: Your current coverage likely stops at the border. Again, your credit card company likely has an inexpensive package. Mine doesn’t fuss much about what’s covered or not. It covers me for a specific dollar amount if I’m in an accident or need to be hospitalized. The hospital will likely want a credit card anyway.
Budget for Home Repairs: Things will go wrong. Either set money aside or maintain a home equity line of credit (HELOC) with your local bank.
Save Records as They Arrive: If you use Outlook, you likely maintain lots of folders. You file e-mails away. If you still receive paper statements from your financial services firm and bank, file these away in manila folders as they arrive. It will be easier to prepare everything to get your taxes done.
Track Business Expenses: If you work in a field like financial services, you might subscribe to publications or websites. Even the WSJ arrives at home, it’s a professional publication. You visit clients, using your own car. You travel to conferences. Some expenses are paid by the company. Others are not. Keep a record.
Tell Your Accountant About Life-Changing Events: Think of your life as a large oil tanker. It takes time to change direction. If your company announces impending layoffs, your accountant shouldn’t find out when an e-mail they send bounces back! They can help you plan for the next stage of your life.
Yes, lots of this is common sense. How many of these twenty items are you pretty certain your clients aren’t doing?
Bryce Sanders is president of Perceptive Business Solutions Inc. in New Hope, Pennsylvania. He provides high-net-worth client acquisition training for the financial services industry. His book, Captivating the Wealthy Investor, can be found on Amazon.com.