Four Areas to Focus On To Be Financially Fit

 In EVOLUTIONS blog

2020 is right around the corner. Are your finances ready?

Yes, you may already be gearing up to hit the gym to nail your physical fitness resolutions for the coming year, but what about your financial fitness? Are you missing an opportunity to build significant wealth? 

You don’t have to! 

In today’s post, we’re looking at four of the most important aspects to achieve financial fitness in 2020. 

Use Tax Laws to Your Advantage 

Most of us dread taxes. But you might be missing out on serious tax breaks if you’re using free tools to do your accounting. 

In fact, financially fit folks use tax strategies throughout the year to reduce their tax burden while increasing their financial fitness. 

There are a few ways you can do this too. 

  • Consider Income Deferral. If you have an employee funded 401K plan you can snag a tax deduction in the next year. 
  • Give to Charities. If you’re playing the itemized deduction game, and you’re falling on the cusp of deductions on your Schedule A, you might want to consider a charitable donation. 
  • Get in touch with a Tax Advisor. Get in touch with a tax advisor throughout the year to keep you on the path to financial fitness. Otherwise, you could end up getting nowhere by tax season, when it’s too late.

Invest In Financial Management

Regardless of the size of your wealth today, practicing smart financial management habits sets you up for a successful future. Think of it as the consistent effort required to get and STAY physically fit. 

At a basic level, financial management involves:

  • An understanding of your current assets 
  • How to budget the basics
  • Tracking income generation 
  • Savings & investment allocation
  • Insurance
  • Generational Wealth Transfer

However, as you build wealth, new strategies can be implemented for greater growth. 

This is where a financial advisor can help.

 Just like a fitness trainer, an advisor can help you assess where you are today and where you’re going tomorrow. Financial fitness requires expert guidance to get you where you want to go.

Consider Real Estate Investment to Maximize Your Finances

Real estate investment might seem daunting, but with a basic understanding of how to leverage it, you can significantly increase your income and build wealth. 

Think of real estate like the weight set in the gym. 

Lifting is a challenge, but overtime, it helps you burn calories long after you set the dumbbell down. 

Real estate works similarly. 

There are a few reasons why it’s so attractive from an income standpoint:

  • Rental income offers security (Lease contracts ensure you have income for the lease-term)
  • Diversification provides a hedge against volatility 
  • Superior returns (annualized returns are historically healthy)
  • Doesn’t require a large investment up front 

So, how can you tap into the returns real estate offers without being a powerlifting real estate investor?

There are a few ways.

First, consider buying the property you live in now. If you’re a renter, think about buying property, even if it’s a one-bedroom studio. If you play it smart, your property value can double quicker than you can pick up a set of weights!

Second, consider purchasing an investment property. An investment property provides an opportunity to make tens of thousands of dollars. A rental property can generate income for you with very little effort, and it is one of the most stable investments you can make. 

Choosing The Right Lending Options

Choosing the right lending options is an important aspect of financial fitness. Whether you’re buying a house or looking for financial support for another investment, lending provides the liquidity you need without the risk of utilizing too much of your assets and being “house rich” or “cash poor.”

To make smart lending decisions, you need to consider: 

  • Credit scores (And/or repairing your current credit history) 
  • How to Choose the Best Specialized Programs such as FHA, VA, Jumbo, First Time Homebuyer, Investment Properties
  • How Much to Buy & How Not to Over Buy
  • The Right Time to Refinance 

Pairing with lending experts is the best way to choose the right lending solution for you.