Managing

"Apps" are everywhere. The best truly help manage important life tasks. The worst divert energy from important life priorities. For managing personal finances, a handful of apps have received much attention. Many financial institutions provide financial management tools and links to third-party apps. With time and technology perseverance, financial information can be managed. But this is only a step to managing finances themselves. Consider credit card debt. Most households have some, and debt levels are on the rise. So are the interest rates being charged. The average annual percentage rate charged on bank credit cards exceeds 15% and has been rising since 2014. One does not need an app to know that any such debt needs to be managed lower. 2020 is a good year for starting.

Funding

Accumulating capital to fund major purchases – autos, housing, education – is a challenge for most households. While a variety of resources and funding sources can be found for these acquisitions, personal savings is a critical component. The most significant major funding need for each of us is retirement. It too is driven by personal savings. Savings can be enhanced through a range of IRA vehicles, through participation in employer-sponsored plans if available (e.g., 401(k), 403(b) and 457(b) plans), and, when the time comes, determining the best personal strategy for Social Security benefits. While the latter is more forced, other savings mediums require self-selection and initiative. Choose to start saving early and take advantage of all opportunities to increase the level of funding each year.

Anticipating

Last-minute decision making often is inefficient at best. At worst, meaningful opportunities are lost due to indecision or lack of planning. Consider the purchase of air travel. While today’s travelers are armed with multiple websites, they are up against the cunning of algorithms and undisclosed business relationships between vendors and providers. “Consumer Reports” conducted an extensive survey that encourage travelers to “search for flights multiple times and over multiple days”. Good advice for more than just air travel.

Aligning

Year-ends in particular are timely for reviewing investment results. Taking time to look back is helpful to assess progress made. In doing so, it is important to understand not only properly measured investment returns (time-weighted and net of expenses/fees) but also the level and types of risk taken to achieve these returns. But a new year is a time to look forward and the past may be a guide at best. From the first trading day of 2020, risk will be present in each portfolio. Also present will be goals and time horizons for which assets are being invested, and a level of risk that is tolerable for each investor. Aligning risk with goals, horizons and risk tolerance only happens if each has been clearly identified and updated as circumstances change.

Securing

Technology generally and the Internet specifically accompany all aspects of daily living, particularly with respect to financial matters. While receiving and sending hard copies of documents still is possible, electronic transmission of sensitive information is becoming preferred if not yet required. In view of some large-scale incidents, few individuals likely have escaped a “hacking” event. Even with extensive resources and good policies, some notable entities have been breached. So, what can individuals do to secure their financial information? Checklists abound, and here is one from "Kiplinger". To any such list, one can add some common sense. Always confirm with whom you are communicating no matter the form of communication. Never transmit sensitive information in an unsecure format, e.g., within or attached to emails. The bad guys are out there with lots or resources. It may be hard to avoid cynicism, but it is appropriate to embrace skepticism.