Do your finances need a fall cleaning?

This article from Heritage Financial Consultants draws on the same core materials that are included in the management consulting program for Levin Group clients. By gaining a deeper understanding of their financial situation and the options available to them, dentists can make informed decisions that will enable them to reach their retirement goals sooner.
— Roger P. Levin, DDS

Autumn signals change. The days grow shorter and cooler. The leaves will soon explode into an array of reds, oranges, and yellows. The lawnmower gets replaced by the leaf blower. And everybody will be guzzling pumpkin lattes or complaining about those who do.

Fall is also a good time to review your personal and practice finances. It's something many of us put off doing until there's a problem or crisis. With the end of the year fast approaching, take the next few weeks to do a little fall cleaning on your finances.

Examine your budget

John G. McCarthy III is a partner with Heritage Financial Consultants.

A budget is the centerpiece of any good personal financial plan. Start by identifying your income and expenses. Next, add them up and compare the two totals to make sure you are spending less than you earn. If you find that your expenses outweigh your income, you'll need to make some adjustments to your budget (that is, reduce discretionary spending).

Keep in mind that for your budget to work, you'll need to stick with it. And while straying from your budget from time to time is to be expected, there are four ways to help make working within your budget a bit easier:

• Make budgeting a part of your daily routine.
• Build occasional rewards into your budget.
• Evaluate your budget regularly and make changes if necessary.
• Use budgeting software/smartphone applications.

Evaluate your financial goals

Take a look at the financial goals you've previously set for yourself -- both short- and long-term. Perhaps you wanted to increase your cash reserve or invest more money toward your retirement. Did you accomplish any of your goals? If so, do you have any new goals you now want to pursue?

Finally, have your personal or financial circumstances changed recently -- for example, have you gotten married, had a child, expanded your practice? If so, would any of these events warrant a reprioritization of some of your existing financial goals?

Examine your investments

Review your investment portfolio to ensure that it's still on target to help you achieve your financial goals. To determine whether your investments are still suitable, you might ask yourself the following questions:

• Has my investment time horizon recently changed?
• Has my tolerance for risk changed?
• Do I have an increased need for liquidity in my investments?
• Does any investment now represent too large (or too small) a part of my portfolio?

Remember, all investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful.

Accumulated debt

When it comes to personal and practice finances, reducing debt should always be a priority. Whether you have debt from student loans, a practice purchase, diagnostic equipment, mortgage, or credit cards, have a plan in place to pay down your debts as quickly as possible. The following tips could help you manage your debt:

• Keep track of your credit card balances, and be aware of interest rates and hidden fees.
• Manage your payments so that you avoid late fees.
• Optimize your repayments by paying off high-interest debt first.
• Avoid charging more than you can pay off at the end of each billing cycle.
• For mortgages and larger loans, pay extra or make additional payments during the year.

Your credit history

Having good credit is an important part of any sound financial plan. Review your credit report and check for any inaccuracies. You'll also want to find out whether you need to take steps to improve your credit history.

To establish a good track record with creditors, make sure that you always make your monthly bill payments on time. In addition, you should try to avoid having too many credit inquiries on your report -- these are made every time you apply for new credit.

You're entitled to a free copy of your credit report once a year from each of the three major credit reporting agencies.

Tax planning

Fall also means we are the end of this tax year. Now is also a good time to assess any tax planning opportunities for this year as well as 2018. You can use last year's tax return as a basis, then make any adjustments to your current deductions.

Be sure to check your withholding -- especially if you owed taxes when you filed your most recent tax return. If necessary, adjust the amount of federal or state income tax withheld from your paycheck by filing a new Form W-4 with your employer.

Evaluating your practice and personal finances is always a good thing. You may find opportunities to cut spending or increase savings. Even small positive changes can yield big results over time.

John G. McCarthy III is a partner with Heritage Financial Consultants and a registered representative of Lincoln Financial Securities offered through Lincoln Financial Advisors, a broker-dealer (Member SIPC) and investment advisory. Heritage Financial Consultants is not an affiliate of Lincoln Financial Advisors. Lincoln Financial Advisors does not provide legal or tax advice. CRN-1559901-080116

Disclaimer: The comments in this article are not meant to be taken as financial advice. DrBicuspid.com and the Levin Financial Group recommend that you always consult with your financial planner before making any significant changes in your financial situation.

The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.