How to Set Up Your Month-to-Month Million Dollar Financial Plan

Lawrence Delva-Gonzalez, The Neighborhood Finance Guy writes about financial literacy topics which include how to Budget, Invest and Develop a long-term Financial Plan. The goal is to help you make effective decisions and set S.M.A.R.T goals with your money. The information is free but the struggle is not sold separately. Blog post edited by Ecclesiaste Guerrier, MA, SHRM-CP, DE&I.

When they say it’s the little things that add up to a million-dollar portfolio, they aren’t lying. Millionaires rise and fall based on the efficiency of their long-term plans. The research found that 70 percent of families lose their wealth by the 2nd generation. Why?

Most plans have no transferable knowledge (i.e. succession), therefore they aren’t efficient. Since it’s Financial Planning Month, I figure that it’s a great time to help you craft an effective financial roadmap for you and your family for 2022 and beyond.

Table of Contents

If you aren’t planning to succeed, you are merely planning to fail.

October is Financial Planning Month. While I’m not sure who’s titling these months or making them official; I can say that though it might seem odd, it fits.

Over 80% of millionaires are self-made.

It doesn’t literally mean that they created themselves. They might have had coaching, support, and even some luck; however, contrary to popular belief, many did not get a head start with their parents’ money. As such, most millionaires are self-actualized.

And that’s a good thing!

Why? Because if they can make it, maybe there is a chance that you can too. My wife and I became half millionaires in less than 4 years so we know it can work.

The Money Guy Show consistently provides a great breakdown of millionaire characteristics through a myriad of podcast episodes. Part of executing your financial plan requires that you get over the scarcity mindset while dispelling limiting beliefs. If you think it’s not possible then you are 90% through the exit. However, if you think there is even a remote opportunity, then success is just a function of time.

Mindset matters! Check out the video below:

The Unwritten Financial Calendar That You Didn’t Know About

If you are looking for personal accountability and results, you have to start with the unwritten Financial Calendar that the Rich (secretly) use with their financial Advisors.

Aside from each month’s significance, there are events that you should be aware of. Since they don’t fit neatly, I figured it was a good opportunity to drop them here:

If you are looking to do some repairs on your home, shoot for Spring and Fall to save on cooling and heating cost hikes (respectively). Lock in discounted prices for your utilities, if your utility companies offer them.
Based on my DMV experience, the start of winter (around December) tends to be a good time to rent. Be warned that the extra security deposit might put a damper on the holidays.
This goes without saying, but traveling off-season tends to be cheaper. Especially post-pandemic, expect surging flight and car rental prices to make up for two years of lost revenue. Try to do more with less by going to cities with metro and railways.
The 1st quarter of the year is a great time to get married due to cost. However, the summertime is peak destination wedding season so you might want to avoid that.
Fed up with winter and looking for a change, March provides solid new or used car deals. Although the season runs through August, you might be able to pick up a great car for a steal. Consider going to EV for the $7,500 tax break.

Crafting Your Month-to-Month Financial Plan

Investopedia said it best, “having a comprehensive personal finance calendar is a preventive measure, in addition to letting you keep track of the days when you might be able to save money.” I’m going to give you what to look for and what you should be doing every month.

If you want to keep pace with wealth building and inflation, this is how it’s done:

January and Setting S.M.A.R.T.+E.R. Goals

New Year, New You?!

The New Year typically comes with resolutions to do better. Since our weight is external, most people jump back into a gym. But the New year ends up being more like the same you.

Americans, on average spend as much as $33 billion on gyms, fitness centers, and equipment. It wouldn’t be so bad if we weren’t so unhealthy, to begin with. According to data from the Centers for Disease Control and Prevention, the obesity rate reached 42.4% in 2018. And it hasn’t gotten better while working from home.

So what does this have to do with finances? It comes down to three core principles: Being intentional, Setting a Plan, and having self-discipline.

January is all about setting S.M.A.R.T. +E.R. goals. No matter what you are trying to do, take your time and invest in an annual strategy that’s specific to what you are trying to accomplish, measurable, attainable, relative to your overall lifestyle goals, and timely.

Here’s a cost-cutting measure; drink more water, watch less TV, track what you eat, sleep at least 7hrs, and do some HIIT workouts from the comfort of your home using YouTube.

Rewards: better health, confidence, an energy boost, lower utilities, and way more self-discipline going into the next plan of action. Why is all this important? Because Success is a habit.

2022 Contribution limits reminder:

401k, 403b, and/or 457b – $20,500 per person (est increase in 2023 to $22,500)
Catch-up contribution for over 50 -$6,500 per person
Since 457b is in a different section of the tax code, if a teacher has access to a 457b and either a 401k or 403b, they can contribute to both. Plain English: 457b + 401k or 457b + 403b for a total contribution of $41,000 is allowed.

February – Love, Lost, and Estate Planning

Love is in the air. While I know that Valentine’s Day is marketed for couples, just know that self-love is equally or more important.

We demonstrate self-love in self-protection. As such, February is all about financial security. Make sure that your insurances are in order. If you aren’t aware of the protection that you have, now is a great time to read those statements.

Quick checklist: 1. Car Insurance, 2. Mortgage or Renter’s insurance, 3. Medical insurance, 4. Long-term care, and 5. Merchandise warranties, 6. Life insurance, and even 7. Pet insurance.

Additionally, now is the time to verify and update your will or estate planning documents. You and your family should know the plan for when things aren’t going well. You would be doing your family a disservice if you don’t have anything in place.

Bonus: If you need to know how much term insurance you should have, think of the acronym L.I.F.E.

Leave enough to cover your Liabilities i.e. mortgage, credit card debt, etc.
Cover your Income while you aren’t around. (salary x years)
Understand and consider the Funeral costs. And,
Include any Education support. (Tuition and Room/Board)

Financial Spring Clean March

March should be your financial spring cleaning. This includes looking at your closet and making necessary cuts. You can either sell your clothes and other gently used items or donate them. The goal for this month is to de-clutter and detox your life.

Go Mary-Kondo style to give yourself room to breathe and think. Besides, this doesn’t mean that you are rushing to spend more money on new things that you don’t need.

Bonus: You still have until April 15 to make prior year contributions to your Individual retirement accounts and Health savings account that can help you reduce your taxes and increase your refund. If you have extra cash hanging around, it’s better to invest it sooner than later before you find something frivolous to spend it on.

Contribution limit reminder:

Traditional or ROTH Individual Retirement Account (IRA) – $6,000 (2022 Limit), and
Health Savings Account (HSA) – $3,650 for a single person, $7,300 for a family

April – Financial Literacy Month

On top of being the month with the tax filing deadline, April is also Financial Literacy Month.

This is an opportunity for you to dive deeper into financial terms, concepts, and more. The school was designed to introduce you to core elements like critical thinking, logic, and resourcefulness. As such, you already have all the pieces to grow your wealth.

The average US household spent over $60,000 in 2020. Even an allocation of 25% to investments, grows to $1 million in less than 25 years. By 40 years, that’s $4 million. Where your money goes matters.

Putting it all together, becoming literate is what separates earners from wealth builders. You have to understand what you can do with a better financial plan.

The Net/Max Financial plan offers these elements and more. We paid off over $80,000 while investing, and learning the ropes pays off in dividends.

May Flowers and Summer Planning

Go figure, after a complete winter defrosts, May is the month when home sales are the hottest. Raise the value of your home by investing any critical dollars into the Kitchen, Bathrooms, and then Bedrooms. Other spaces are nice, however, prospective buyers remember these top three locations.

While I’m a staunch advocate for owning a home. Knowing when to sell matters too; especially if you need to downgrade. The best part is that the IRS allows you to exclude capital gains (profits) up to $250,000 for a single taxpayer and $500,000 for a married couple. Check out IRS Topic No. 701 Sale of your Home for more details since the two-year rule applies.

May should also be a great time to start planning the summer activities i.e. camps, travel, and downtime. It’s a great idea to cap costs where you can so you don’t run on empty by Fall.

Use the sun as an excuse to get active. And a better excuse to keep fun creative and economical.

Become More Intentional about Travelling in June

Turns out, June 30 is the FAFSA deadline. Personally, I favor being proactive vs reactive. If you file as soon as the window opens, the application uses the prior year’s tax return Adjusted Gross Income (AGI) to determine student aid needs. Depending on how your taxes look, it might not be a bad strategy to consider early or later FAFSA filing.

June is also the intentional travel month. While I know it might be tempting to go Instagram/Tik-Tok big or go home, Summer travel can be as easy as exploring the city or even two cities over. Never forget how impactful simple memories are. BBQs and staycations are still amazing, especially while travel costs are going for a nasty premium due to the pandemic.

Don’t wait, start planning today!

Launch and Learn July

While July doesn’t carry any big-ticket items besides the 4th, your financial plan can benefit from a cash flow launch. Consider July as a month to publish a book, develop e-content or launch a small business.

You can’t decrease your expenses to wealth. At some point, you will need to start generating some passive income to add to all your festivities. Turn your hobby into a task that makes more dollars with common sense.

August – Look out for Best Buys that are in line with your Financial Plan

For some reason, August is the best time to buy a house. While I won’t pretend to know how it’s possible since people are gearing up to go back to school, the stats don’t lie. According to Zillow, inventory is healthy and at a discount since housing season starts as early as April.

Add that to the financial plan, and expect to pay less in taxes for back-to-school products and even less for a new house to surprise the kids with on their way back.

Do an Annual Wealth Recap in September

September for me is a recap month. After nine months of winging it and failing at nailing any of your New Year’s resolutions, now is the time to close out the year stronger than you started.

In truth, the goal is to take inventory of what didn’t work and how you need to revamp your SMARTER goals. Those being SMART + [E]mergency Savings and [R] Retirement planning.

Not everything will work out

Make peace with life and stop fighting upstream.

The goal of life is to continue to learn and adapt to changes. You can’t adjust readily if you don’t have emergency savings in place. Check out our Acid Savings Plan (or simply our emergency savings plan). My wife and I only keep up to $1,250 per person in savings. In addition, since the savings rate is 0.01%, the rest of our money is pushed through retirement planning vehicles.

The goal for the average family making north of $85,000 is to invest at least $30,000 per year or $2,500 per month.

Investing in some wealth vehicles can yield significant tax advantages. In 20 years, investing $2,500 monthly at the historical rate of return of 8% will yield you $1.4M. Even with 3% dividends annually, that’s a nice $42,000 per year just on your investments on top of market growth. That sounds kind of nice, doesn’t it?

A great financial plan will always give you a win-win lifestyle strategy.

Financial Planning Month – October

At this point, you will have to share this with a friend or comment because this is all free information that you can really use to build a sizeable nest egg.

Now it’s all full circle since October is Financial Planning and *Cybersecurity month.

While the last quarter shapes up for holidays and family time, based on all your hard work, you are on the path to becoming a millionaire.

Serious pats on the back are in order. The work is not done yet; start reading up on health planning for the Open Enrollment season beginning November 1st.

As a bonus, listen to the Dreamer’s Podcast, Marriage, Kids and Money, and Journey to Launch if you need Financial independence encouragement. You literally don’t have to die broke.

The Digital era has tons of pitfalls so ensure that your passwords are up to date.

Tax Planning in November

November is Health and Tax planning season.

Your first goal for November is to review your health coverage while making adjustments for significant events i.e. marriage, old age, kids and etc. Secondly, your next step is to plan with your CPA or just read up on tax changes.

The IRS usually updates any changes so that you can be aware of how your taxes will play out for the following year. It’s a lot but with a good CPA, you should be fine. However, if you are just starting out, especially if you are in college, volunteer.

Yep, volunteer with the IRS’s VITA program. It teaches you the basics of taxes. Armed with this new skill, you will help as a FREE tax filler at a designated local site. It qualifies for high school volunteer hours and the best part, is that your knowledge will benefit you and your family.

Care Act Open Enrollment period: First chance to apply for 2022 healthcare coverage.

Major Discount Spending Days:

Investment Planning in December

The Financial plan train made it to December.

It has been a long time coming, but we made it. For good or for bad, mistakes or not, we are closing out another year. Besides the holiday gifts, there are still a few things to add to the Christmas list.

The first thing that comes to mind is the 401k, 403b, and 457b contribution limits. The deadline is December 31 every year. If you have not maxed out, you might want to reconsider how you structure your income for December. If you have more money that month, allocate it for the win.

Second, the Rich are working hard with the financial advisors to pull off a last-minute tax-loss harvesting move by selling out of great stocks at a gain of $3k and offsetting it with losing stocks for $3k. The IRS allows this technique so consult with your professional or googgle the information on the IRS website.

Third, don’t let the end of the year tank your household finances. You don’t need to buy your kids the most expensive item on the shelf. Most of that time would be better spent teaching values, playing board games, or spending quality time – the only resources we don’t have enough of.

Bonus. I guess the commercials didn’t mislead us; buying a car in December is economical. While I wouldn’t do it, stats point to the end of the year as a great opportunity.

Create a Financial Plan and Take Bold Actions

Wow, you made it. By God, I made it too.

Your financial plan should work for you. It shouldn’t work against your goal. Designing one that evolves with you is likely your best bet. Take a bolder step to redefining your life because if what you have been doing, wasn’t working, it’s perfectly fine to change.

“Do what you NEED to do first. I guarantee it will pave the way for what you WANT to do.”

All the rest of the words are above. You are in charge of your destination. The finish line is not moving. So start running. Finally, go forth and download. These free financial apps have helped me immensely;

Personal Capital and;
Mint.com

PS this is a wealth secret; “It’s easy if you have a financial plan.” Financial advisors make the rich richer month-to-month. Here’s how.

Disclosure: This post is brought to you by the Neighborhood Finance Guy. We highlight financial literacy information, resources, and more on your way to money management goals and personal wealth. Our goal is to help you make S.M.A.R.T decisions with our money. We do not give investment advice or encourage you to adopt a certain investment strategy. Your personal finance is up to you. If you take action based on one of our recommendations, we don’t earn a dime as of 5.2022. We operate independently.

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