It’s almost 2021.  And, despite all our planning- unless we were in the upper echelons of the economic strata, where we could work from home, where we could afford to hire aides to keep our kids in check and on message with home schooling, 2020 was pretty much a financial disaster.

Now that we have at least 2 vaccines to make a difference, that we’ll soon have a President who cares about the body politic (as opposed to using politics to grow his cash hoard), we can hope that life will return to some degree of ‘normal’ [whatever the heck that will mean] in short order.

And, that means, we need to recognize that we – that’s you and me- are the CEO’s of our own personal lives.  If we’re married, it may mean that we are sharing the CEO position, with each of us handling the parts of our joint lives that we do best.

In any event, a good CEO (even a bad one- s/he just does a lousier job of planning) examines their ‘corporate ship’ each year and determines what needs to be developed and done to increase the bottom line (in personal life parlance- savings and retirement), to make for happier employees (which means happy spouses and kids), and to determine infrastructure needs and plans (what we need to ensure our lives are stable).

Let’s examine our balance sheet- our assets and our liabilities.

Our assets- our checking accounts, our savings accounts, what we have at various brokerage houses, what’s in our IRA and/or our 401(k) accounts- they need to be listed.  Let’s not forget to include our home, our car(s), and other physical property.  Include account numbers, log-in credentials, key contacts for the various assets.

Are our investments adjusted to where we are in our lives?   We may want to be very aggressive when we are in our 30s, but by the time we are in our late 60s- those investments need to be in more stable environs.

Do we have enough assets?   What should be done to shore them up?  To reduce annual fees?

Which brings up our liabilities.

To whom do we owe money?  Over what time frame?  What are our credit card balances and the individual interest rates? List the monthly minimum payment for each account that has one. Don’t forget our mortgage! And, like our assets, include the key contacts, account numbers, and log-in-credentials.

Now- how much of our after tax funds is devoted to retiring our debt?  What is our debt percentage to our current assets (checking accounts, savings accounts, brokerage accounts)?

How do we adjust our payments so we are paying more for the bills with the higher interest rates and less for those with zero or low interest.

The difference between our assets and our liabilities is our net worth.  Now that we see how low that is; what are we going to do to increase our net worth?

Which brings up our other financial document- our income statement…

From where does our monthly income derive?  That’s both before and after tax withholding amounts, too.  How much investment income will be put away?  Are there any expenses that we should cut?  And expenses that will escalate this year- and how will we handle these?

Which leads to our business plan, our strategic plan. What do we want to do- and how do we think we will accomplish that?  When will we retire- and what will that look like?

Will our funds come from savings?   Social Security?  401(k) funds?  How much more must be put away now to have this reality obtain in the future?

Which brings up the risk scenarios for our lives.  What happens if I or my partner kicks the bucket?  Are our life insurance policies up to snuff?  What about disability insurance- should we succumb to a long term illness?

What about our parents?  Are they going to become part of our responsibilities?

No matter what your case, it’s always best to know where you stand.  So we can make educated decisions on our purchases and savings.

Happy New Year.