insight magazine

New Year, New Money

These simple steps can help you create new wealth in the year ahead. By Mark Gilbert, CPA, PFS | Winter 2017


My opinion may be biased, but I am a firm believer that everyone has the capability to create wealth—regardless of their income level. Sure, creating wealth requires a real wish to improve your financial position, and some disciplined saving and spending, but it’s not as hard as it may seem.

So, as we enter the time of year when many of you will start setting goals and making wishes for the year ahead, here are some simple money moves—many of which you may have overlooked—that can help you create new money in the new year.


Tracking your expenses for 30 to 90 days will teach you how, and how much, you spend. Chances are you’ll be surprised to see all the things you buy, and how costly they are, when you honestly account for your spending habits. When you know where your money goes, it’s easy to ask yourself if the things you’re spending your hard-earned paycheck on are necessary. And if they are, perhaps there’s a cheaper way to acquire them. This is a simple exercise that will help you identify if and how you can trim your expenses to immediately start growing your wealth.


One of the best ways to build wealth is to automate it. So, instead of personally setting aside your newfound savings (see above) at the end of the month or whenever you see your checking account balance increase (the leftover dollars after expenses), save and invest first by directing your employer to automatically deposit a portion of your paycheck into a savings or investment account (or both).

One option is to have a flat dollar amount, say $200, deposited into a savings account and the rest of your net pay deposited into your checking account. Another option is to specify a withholding percentage of your gross pay, say 10 percent, to deposit into your employer-sponsored 401(k) or 403(b), or any other type of savings or investment account permitted. While you’re at it, if your employer offers a matching contribution on retirement account contributions, try to contribute at least the amount required to earn the full company match.

Making these money moves will make you money, and I bet you won’t even notice the “missing” money from your checking account—you’ll be too busy appreciating the new wealth you’re building.


I’m sure you’re familiar with the well-known personal finance recommendation of setting aside a minimum of three to nine months of living expenses in an account that’s only accessed, you guessed it, in case of an emergency. It’s a basic component of creating wealth because you don’t want to be forced to draw funds from your long-term savings and investment accounts for a short-term emergency.

The size of your emergency fund should consider variables like monthly spending, how quickly you think you can find a new job if necessary, and whether a spouse’s or significant other’s resources are sufficient to meet emergencies. This fund doesn’t always require cash. For example, in some cases, a home equity line of credit could serve as an alternative emergency fund. In addition, the cash value of whole life, or other permanent life insurance products, could be suitable choices for an emergency fund.


Unless you’re older than 85, or have a special health situation, I recommend setting a minimum 10-year time horizon for your investments. This means allocating a healthy portion of your investments to equities. Current interest rates are just too low for most people to accumulate wealth by investing exclusively or even largely in traditional bonds, savings accounts, and CDs. The right mix of these asset classes depends on your own financial situation—goals, resources, risk tolerance, and other factors—and I recommend meeting with a personal financial planner to develop a plan that takes all of this into account to establish an appropriate equity allocation.


Don’t worry about timing the market, worry about time in the market. For most investors, wealth creation comes from committing dollars to an investment and regularly adding more dollars to it—in good times and in bad times.

It’s easy to get caught up in trying to catch a piece of a bull market or invest heavily at a market bottom, but if 2017 has taught us anything, it’s that markets are extraordinarily difficult to predict. Instead, it’s generally better to stick with making regular investments according to a preset timetable (weekly, monthly, quarterly, etc.). Keep those dollars invested, especially in equities. Further, a schedule for investing in equity mutual funds or exchange-traded funds (ETFs) can take the emotion out of deciding which individual equities to purchase and when to sell them.


We’ve all heard the adage of successful stock market investing: Buy low and sell high. If you have the tolerance for it, one way to “buy low” is to invest in recent weak market performers. For example, at any time there will be economic sectors—Consumer Discretionary, Financials, Industrials, Technology, etc.—that outperform or underperform the broader market. Market makers and investors can be fickle and may sell off last quarter’s winning sectors and rotate into others as company, financial, economic, and geopolitical news is released. You can take advantage of this by periodically overweighting your portfolio in lower-returning sectors. While you may temporarily see losses, more often than not you will be rewarded with higher valuations if you allow a longer-term horizon for your investments to grow. There are many sector-specific mutual funds and ETFs that make this strategy easy to implement.


Your career is probably the most significant tool you have for creating wealth. For example, investing in technical and managerial training for yourself could drastically increase your earning and career potential. Take stock of your present career path, assess the likelihood of future and financial success, and make the changes needed to achieve your goals.

The start of a new year is a great time to assess where you are personally, professionally, and financially, and make positive changes for the year ahead. Whatever New Year’s resolutions you come up with, make creating wealth and ensuring a solid financial future one of them.

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