12: Eight Simple Ways to Improve Your Finances with Jason Clevlen


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Show Quote

“Money is a terrible master but an excellent servant.”

-P.T. Barnum


Wealth Builder Tool– Download the free Wealth Builder Tool to start implementing your own spending plan today. 

Have a Question? — Submit your questions to Jack Marino Jr. and Jason Clevlen. 

Key Takeaways 

1) Automate spending and saving to maximize the way you manage your cash flow. Consider replacing your current budget with a spending plan that will provide instant feedback about your finances without micro-management.

2) It’s a great idea to review your finances annually. In this review, consider your spending plan, the amount you are saving and investing, your insurance needs, possible tax benefits, and your overall financial goals.

3) Sometimes when reviewing financial goals, you’ll need to make adjustments to those goals and rearrange your financial priorities.

Show Notes

**Click the timestamp to jump directly to that point in the episode.

[1:20] – 1. Implement a Spending Plan

  • It’s important to manage your cash flow and have a plan for every dollar that you spend.
  • Use the free Wealth Builder tool to get started with this process.
  • The goal is to figure out how much you want to spend on various items.
  • Once a year or more sit down and look at where your money is going.
  • Make sure you’re setting aside savings and not accumulating debt.
  • Automate savings and spending.
  • With this system, all of your bills are paid and you only have to manage discretionary purchases.
  • Instead of micro-managing every category, this provides instant feedback.

[5:39]  2. Maintain an Adequate Cash Reserve

  • Cash reserve is important because that’s your emergency fund.
  • Have six months of expenses in your cash reserve.
  • If you’re looking at high-yield savings accounts, make sure it is FDIC insured for your protection.
  • You can get close to 2% interest with some online savings accounts.
  • If you have excess cash beyond your six-month reserve, put that cash to work towards another goal.
  • Having excess cash may not seem like an issue, but longer-term the opportunity cost can add up.

[11:40]  3. Increase the Amount that You Save and Invest Annually

  • Don’t get comfortable with the amount you’re contributing to the various savings and investment accounts.
  • You need to increase the amount you’re putting into your savings accounts every year.
  • This tactic will make a huge difference over the long haul.
  • Talk with your tax advisor or financial planner about which retirement plan you should set up and how much you should contribute.
  • Maximizing retirement plan contributions each year is a great goal.
  • You have to take everything that you do in context of all the other moving parts of your financial plan.
  • You should also be taking a look at whether you should be rebalancing your portfolio on an annual basis.
  • Anytime you see volatility in the markets, that can be a great time to rebalance.

[17:00]  4. Focus on Debt Reduction

  • Take a look at the debt you have year over year and make sure that debt is trending down.
  • Make sure you have habits and systems in place that will help you become debt-free.
  • If you have high-interest consumer debt, you definitely want to focus on getting that paid off.
  • Ideally, we don’t have any credit card debt.
  • Find out if you can refinance to a lower rate.
  • Sometimes people forget to look at refinancing auto loans.
  • As long as you aren’t looking to move anytime soon, you can consider refinancing your mortgage.
  • Sometimes there’s an opportunity to do a zero-cost refinance. In this case, you’re taking an interest rate that is slightly above the going rate in the market and for doing that you get a credit.
  • That credit can be applied toward covering the closing cost.
  • If interest rates go even lower, you can refinance again.
  • Sometimes it makes sense to consolidate other debts into home equity loans.
  • The danger is not fixing the underlying problem that caused the consumer debt in the first place.
  • Review your credit cards and make sure you’re paying them off on a monthly basis.
  • Do you need to consolidate your government student loans or refinance? Should your private student loans be refinanced? Look into this.
  • There are nuances related to student loan forgiveness that you need to be aware of if you qualify.
  • A good strategy for paying down debt is to tackle the smallest balances first. This will help you get the momentum going.

[27:32]  5. Review Your Financial Goals Annually and Track Progress

  • When we think about our financial goals, it’s important to look at your goals and see if we’re making progress towards them.
  • Do we need to make changes to our goals?
  • Constantly evaluate your goals so you can adjust accordingly.
  • For example, if you were originally planning for in-state tuition for your kids and now they’re considering schools out of state, you may need a different goal.

[30:15]  6. Review Your Insurance Coverage and Insurance Needs Annually

  • There are a variety of types of insurance we should be looking at periodically. 
  • Start with auto, home, and umbrella coverages. Make sure you have the right amount of coverage in place.
  • Shop around every few years to see if you can save money on premiums.
  • How much life insurance do you have and how much do you need?
  • If you’ve made health-related changes or improvements you can get a review and adjust your premiums.
  • The same thing goes for disability insurance and long-term care insurance.
  • Seek help from a professional when doing this.

[34:18]  7. Maximize the Tax Benefits of Your Charitable Giving

  • One way to be more tax-efficient is to donate highly appreciated securities in lieu of cash.
  • There’s also donor-advised funds that can be utilized. If you had a year with a really big income and you want to donate a large amount but don’t want to donate it in one year, you can make the contribution and receive the tax benefits today and then decide how and when that gets distributed.
  • Consult a tax advisor before implementing these strategies.

[38:06]  8. Fund Your Health Savings Account (HSA)

  • A health savings account is a great account to use to help pay for medical expenses with pre-tax dollars.
  • It’s an instant tax saving to make these contributions.
  • Set up an automated monthly contribution to fund your health savings account.
  • There’s also a one-time rollover. You can do a one-time transfer from your IRA to the HSA to fund medical bills without taxes or penalties.

[40:43]  Hear Jason’s tip of the week.

  • If you can focus on building up your HSA over time, that will allow you to change the type of health insurance plan you have. You could increase the deductible and lower your insurance premiums.
  • If you have any questions, head over to profitstowealth.com/contact and submit your questions.

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