Your Personal Finance To-Do List


Brett Pechersky


March 4, 2020

The new year can feel like a fresh start, a new decade even more so. January sees gym memberships swell, work fridges stuffed with the brand new tupperware of well intentioned meal-preppers and office talk about how maybe, this year, things will be different. What you don’t see or hear much about, however, is how your friend is considering a refi on their home, or how your colleague is going to start maxing out their Roth IRA.

Quite frankly, it’s probably because personal finance isn’t nearly as glamorous as yoga pants, crossfit friends or this year’s hot new superfood—nor does it need to be. But in 2020, saving for retirement has gotten an unlikely ally in Seattle Seahawks running back Marshawn Lynch who, during a postgame interview, urged young players to take their money as seriously as their sport: View Tweet Here

So, maybe with Mr. Lynch’s help, we’ll be seeing a lot more college, home and retirement saving advice in popular culture. Or maybe he’s an anomaly off the field as much as he is on it. Whatever the case, he’s absolutely right: planning for your future isn’t something for your future self to worry about, nor is it really something you can afford to focus on “when I grow up”. The time is now.

Of course, we understand that the financial world is intimidating for beginners or those who view themselves as outsiders. That’s why we have compiled a 2020 Personal Finance To-Do List in order to help you start saving today. Because starting is, far and away, the most important part.

Pay yourself first image

1. Pay Yourself First

You’re likely already paying your bills automatically, so you should also be saving automatically. With online banking and investment accounts, setting up monthly withdrawals has never been more accessible and easy. Start small. Put $20 of your paycheck into your 401k [link to 401k services page for each mention of the 401k], or into any number of savings accounts your local bank has on offer. The point here isn’t to force yourself into becoming a paranoid spendthrift, but to start saving as early in your life as possible.

Compound interest is your friend. The term might bring back memories of high school math, or someone is a small black suit, but what it really means is: your money makes money. If you put $100 into an account that promises an annual 2%interest, at the end of the year, your $1200 contributions will have netted an insignificant $24 in interest (1200 x .02 = 24). But, if you kept it up for 30 years, that $24 in yearly gain grows to $234.12 after 10 years, $548.17 after 20 and in 30 years, to $931.02. 

A little over $900 a year isn’t exactly enough to live on, nor is that figure alone very impressive. What is eyebrow-raising however, is that you earned a 77% profit on your $1200 investment that year. Compound interest works on the idea that the longer you save, the more you will make. Consistency is the only variable, here, so there is very little else to consider early on. 

A great place to start your journey with compound interest is a 401k. These replaced pensions starting in the 1970’s, and have become one of the most widely-used investment vehicles in America. Like most entries in the tax code, the section 401(k) is bogged down in obscure language, restrictions and caveats. Much more simply: a 401k is a way for you to automatically save a chunk of your paycheck, and have your employer match it (quite literally, free money). And because of compound interest, the longer you contribute to your 401k, the more money you can make by the end of your working life. 

Another example: 

Person 1 starts contributing $1,000 a year into their company’s 401k at age 25*

Person 2 starts contributing $5,000 a year into their company’s 401k at age 40*

At 65, Person 1 will have contributed a total of $40,000, and Person 2 $100,000. When they retire, Person 2 will have a balance of $208,315.51, and Person 1 will have $253,679.53. Having invested less than half of what their colleague has, Person 1 will have netted almost $50,000 in additional savings. 

*Assuming an employer matching contribution of $1,000, and 5% investment return. Figures from the SEC’s []

manage your spending image

2. Manage Your Spending

This is the big one. Automatic withdrawals, contactless payments and fraud alerts have revolutionized how we spend and save money, but they have also gotten us out of the habit of tracking our cash. We might not be getting robbed by strangers, but on the same token, we might be robbing ourselves. Bookkeeping is tedious and its image certainly doesn’t help. However, like diet and exercise, the more you do, the better your results become. After all, you likely know the exact amounts and dates of the monies entering your accounts, so you should also know where all of it is going.

Start simply. Your bank probably has an expense tracker that will provide you with a monthly list of expenditures broken down into categories. Familiarize yourself with those spending habits. You’d be surprised how those daily parking fees, coffees and lunches add up. 

Make changes where you can. You wouldn’t start your running career with a marathon, so you shouldn't start your savings journey by trying to eliminate the small joys in your day. Keep your nice coffee because it’s nice; that $2 bottled water with lunch, maybe bring your own. 

Improve when you’re ready. When you become more accustomed to seeing the whole of your financial picture, up your game a little. This article [] from NerdWallet has a range of tools to help you hone in on your budget, and to more adeptly plan for your month (year, decade) ahead. 

Managing your spending is about building habits and setting goals. If becoming financially healthy is your goal for 2020, then understanding where your money comes from, and where it goes, is one of the most important aspects of achieving that goal.

get cash back image

3. Get Cash Back

The recession of 2008 saw banks pivot heavily from mortgages to consumer credit. Enter cash back. If you have a credit card, chances are that it comes with some kind of points-based or cash back system. This is where you start flexing your influence as a customer, and demanding more from the companies that serve you. 

With programs from companies like Visa, Mastercard and Capital One that promise 5% cash back on select purchases, these credit behemoths have finally started to share their profits with the people who use their product. Many programs offer up to $1500 per quarter on your purchases. That’s $6000 a year in your pocket without you doing anything differently. 

When properly managed, a “portfolio” of credit cards can net you thousands of dollars a year on the goods and services that you already plan to spend money on. This is where tracking purchases comes in handy. You want that nice coffee, get a 5% discount every day by making it one of your cash back categories. The same can be said with necessaries like gas, utilities, groceries, etc.

Of course one has to be very careful with credit usage, and the high interest rates on carried balances, but when you’ve learned how to properly plan for your purchases, a 5% discount is a no-brainer. 

travel somewhere new image

4. Travel Somewhere New

See? Not everything on this list has to be daunting or about the numbers. You don’t need to make becoming financially healthy about shying away from the best parts of life: embrace them. Saving for retirement can be boring or seem too far off to appreciate. By setting a goal that pays off more quickly, you can still gain the necessary skills required to save, but you can experience one of life’s great joys at the same time. 

Celebrate the hard work you’ve done while gaining valuable perspective on the world and your life. Take time off work to focus on loved ones, or self-improvement. A mid-year break from your office, from life and from saving (it’s okay to be a little bit frivolous sometimes) is just a necessary part of staying calm, focused and, most importantly, sane. Who knows, maybe you’ll even get some cash back on your airfare.

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5. Build a Roth IRA

Okay, so you’re back from vacation and you’re ready to diversify your investment portfolio. At first glance, a Roth [link to the appropriate section of Berer’s services page] looks like a reversed 401k, in that you invest with after-tax money, giving nothing to Uncle Sam when you withdraw. Diving deeper, as Vanguard does here [], we see that there are several more-complex reasons why these types of IRA’s might be beneficial. 

Primarily, Roth IRA’s provide investors with a tax-free way to get their savings after they retire. Because you have already paid taxes on the money you put in, there is no need to pay it again on the way out. But you also don’t pay taxes on the interest earned on your investments. And that’s huge. An additional benefit of the Roth is that you aren’t required to pull money from the account every year (aka Required Minimum Distributions or RMD’s), as you would with a traditional IRA or with your 401k. There are also no limits on the age at which you have to stop contributing (it’s 70.5 for a traditional IRA), and if you get savvy enough to reach the contribution limit of your 401k, you can still contribute to a Roth.

Roth IRA’s also provide investors with a massive amount of choice. With the myriad companies that currently provide IRA’s in all their forms, consumers are almost overwhelmed with choice. From structuring to associated costs, the free market has allowed competition to flourish. Of course, this comes with decisions to make, and decisions regarding retirement [link to roth page] should never be taken lightly. Dictated here by whether or not your income is low enough to contribute in the first place (there are, of course, ways to circumvent this), how close to the yearly contribution limit you should get or even whether to choose a Roth over a traditional. 

mortgage debt image

6. Refinance Your Mortgage or Student Loan Debt

Remember when we mentioned that banks moved away from mortgages and towards consumer credit? With the financial scare finally leaving their system, we are finally seeing a return to low interest rates mortgages and even student loans. The first step in this process is to educate yourself on the situation [link to services page, same with all instances of refinance]. Start by asking yourself three questions: Can I get a better interest rate? Can I shorten my term? Do I need to use some of my home’s equity now?

What’s right for you depends not only on your answers to those questions, but also on how you answered them. Sorry to be a little obtuse, but this is a complicated and lengthy subject. For instance: if you got an initial mortgage of $250,000, and have paid off $100,000 of it, you could take out another loan for $200,000, pay back your initial mortgage and put $50,000 into your pocket. Maybe for your student loan debt, or to finance renovations to your property. If the former, it might make sense because of the high interest rates on your student loan debt vs. the much lower offers that you can currently achieve on a mortgage. If the latter, you might get a hefty return from the $50k you just invested back into your home. 

If you have a variable rate, a recently-improved credit score or simply want to lower your monthly payment, a refinance might be the solution for you. 

estate plan image

7. Update Your Estate Plan

You’ve saved, balanced your books, collected travel memorabilia and gotten a lower interest rate on your mortgage. Now what? This is where you get to step back and see the fruits of your labor amassed in one, pride-inducing document. We know that writing a will [link to estate services] doesn’t often inspire joy. But taken from another perspective, it can be seen as a way of protecting your family, and taking stock of all the good things you’ve accomplished through your hard work.

Most basically, we urge each of our clients [services page] to have an up-to-date list of beneficiaries, and records of specific gifts they have in mind. Consider the legacy you want to leave behind, and those you wish to entrust with telling your story. 

When you dive more deeply into estate planning, there are many more factors one must consider. Estate tax rates are highly contested and have been in flux in recent years. Some states even have an inheritance tax, which differs from the federal estate tax. While there are ways to reduce the overall tax burden your heirs will pay[estate planning link], they are diverse, and require proper and meticulous planning.

life insurance image

8. Upgrade Your Life Insurance

Along the same lines as an estate plan reorg is reconsidering your life insurance (or considering it in the first place)[link to life insurance services]. First and foremost, the increasing life expectancy of Americans means that monthly premiums are at an all-time low. And paying less to get more is almost always a good thing. Secondly, is the increased competition we are seeing in the insurance market. Just as with cash back, the uptick in companies doing business means that the consumers are the ones reaping the benefits. 

If you do not already have a policy, there are now so many options it can almost seem impossible to differentiate one from the other. The main types of life insurances offered in today’s marketplace are: 

  • Final expense
  • Guaranteed issue
  • Group
  • Simplified issue
  • Term 
  • Universal 
  • Variable 
  • Variable universal 
  • and Whole

This newsletter [] should help clarify specific differences between them.

Additionally, there might be opportunities to “refinance” your life insurance. This can lower costs of insurance (COI’s), help you to take advantage of new product features/ tools, move to a mutual company (companies owned by their policyholders instead of shareholders) or get a better underwriting score. Access to the internet has made it easier than ever to explore your possibilities [life insurance page], and to make sure that the life insurance solutions you choose match your financial situation.

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9. Consolidate your IRA’s

Congratulations, you have saved widely enough to have warranted owning several IRA’s. Now is the time to consolidate and simplify your life [link to ira’s section]. There are many benefits of shifting into one, but the most important are: lower fees, more control and less stress. 

As you get older, and therefore more risk averse, you might need to distribute the funds of IRA’s into various markets and assets. In so doing, you will incur brokerage fees. This only multiplies when you own several of them. Not only will you need to go through the motions of rebalancing the portfolios of an IRA, you now need to do that several times over, and market depending, several times a decade. 

All this work means not only higher associated costs, but more of your time lost. When you consolidate your IRA’s, you can more easily manage investments, while only paying brokerage fees on a single account. With only one account to manage, you are also far less likely to miss an RMD, and will help your heirs more easily understand your financial picture if the need arises. 

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10. Check into a Spa

That’s it, you’re in the clear. While you might not have needed to complete everything on list this year, you’ve taken those first valuable steps in creating a healthier financial future for yourself and for your loved ones. 

So go on another break, but this time, maybe leave the airlines and the stress of travel behind. You’ve become a master at researching your financial picture; deciding on the best spa experience should be a walk in the park. Maybe the spa even has a park to walk in. Clear your head and revel in all you’ve accomplished. More importantly, take it as a time to de-stress and unwind. You do, after all, want to be able to enjoy all of the hard work you put in over the last year. 

Look back at 2020 and reassess your goals, cross off the ones you’ve accomplished, and reposition the ones that you didn’t. Set new goals for the coming year and for your future. What could you have improved or done differently? Reflect on the things you did really well. The mental recharge will allow you to eliminate the clutter of the year behind you to more clearly see the ones ahead. 


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