Nikhil Abad

Son. Husband. Dad. Product Management . Personal Finance. Investing. FI. Pune. Very much Indian at heart. WIP.

[Nikhil Abad @nikabad]

@markcecchini This is solid for anyone getting their financial life figured out. Thanks for posting this, Mark.

[Mark Cecchini, CFP® @markcecchini]

If you are thinking about really getting serious about your finances (even via DIY)

these are exactly the exact steps I would take to put myself MILES ahead of my peers:

0. Yes, you should maybe hire someone

Not everyone needs professional help to steward this process

but there are more options than ever:

1) One-time financial plan engagement
2) Ongoing advisory relationship (planning only)
3) Ongoing advisory relationship (planning + investments)
4) Ongoing advisory relationship (planning + investments management + tax prep)

work through this process with a good planner can provide an insane amount of value, and sometimes the hardest thing is just knowing:

1. Where to even start
2. What information to gather
3. How to implement changes
4. How it all fits together
5. How to hold yourself accountable
6. What questions to ask

1. Get organized before doing anything

Pretend you are going through a mortgage underwriting

If you don't know how mortgage underwriting works, you basically have to provide the bank with EVERYTHING about your finances

Gather all of the following parts of your balance sheet (or enter them into a financial app)

> Bank accounts
> Brokerage accounts
> Crypto holdings / wallets
> Retirement accounts (IRA, 401k, etc)
> Charitable vehicles
> Private investments
> Real estate assets
> Mortgage / HELOC loans
> Credit cards (including any balances and rates)
> Student loans
> Family loans

Pull down PDFs like your last year's W-2s and 1099s (both investment-related 1099s and self-employment related)

Grab your last few paystubs from your job

Grab your last few years of tax returns (if you use TurboTax, you can log back in and download them)

Put them all in the same folder on your computer's desktop

2. Really sit down and think about what you want to accomplish by doing this

No, you don't have to have these big massive financial goals like buying a house or retiring early

(honestly, most people couldn't tell you at any one time)

Your goals could literally just be:

"get in better financial shape"
"have a plan and be smarter with money"
"know where we stand"
"know what we can afford to spend"
"have better financial relationship with my spouse"

but you should ask yourself things like:

> What about money is important to me?

> Who are the main players in my life, both personally and professionally? Will I ever need to financially support them?

> Do I want to give money to charity? What causes are important to me?

> What would financial independence look and feel like? Do I actually WANT to fully stop working one day?

> How much real estate would I like to own (and where)?

> What major purchases might I make in the next 3-5 years?

> Am I comfortable with taking risk with my money?

3. Analyze your current financial situation

Create a balance sheet / statement of net worth

> Add up all of your assets (cash, investments, real estate, personal property

> Subtract out all of your liabilities (loans, CC's, mortgages, etc)

This is your current Net Worth -- you should aim to grow this over time

Create a budget / monthly statement of cash flow

> In terms of income, what are you currently making per month, on average?

> In terms of expenses, what are you currently spending, on average?

> How much are you spending on housing as a % of your gross income? Ideally it should be <30%

> How much are you saving, and in which accounts?

What is your savings ratio as a % of your gross income? Ideally it should be 15-20%+, but be careful not to save ALL the money into retirement accounts or ALL into taxable brokerage accounts

(Diversify your taxable dollars)

Using facts gathered (current and future income, expenses, major purchases, etc) craft an annual cash flow projection

If you are considering a major purchase, make a “what-if” scenario, such as home purchases or liquidity events for company stock

Take the baseline cash flow and modify it to reflect the new potential changes in inflows and outflows

4. Develop and execute planning and investment changes

Consolidation of existing accounts, where possible

Ex) Roll all old 401(k)'s together, or into an IRA
Ex) Consolidate brokerage accounts

Opening of new accounts, where necessary

Craft an overarching investment strategy without overcomplicating things or making it difficult to implement

Avoid speculating with the bulk of our money, avoid day trading or trying to time the market

Fold in your company stock considerations and strategies

5. Monitor progress and follow up on outstanding items

Set priorities for focus areas in 2024 (insurance, investments, estate, employee benefit review, etc)

Monitor portfolio implementation and set up automatic contributions and set reminders for rebalancing & tax loss harvesting

Other items for consideration

When it comes to diversification, I typically think about it in 3 ways:

> Diversification by balance sheet mix

(cash, after-tax investments, pre-tax retirement, Roth, real estate, etc)

> Diversification by investment asset allocation mix

(stocks vs. bonds, US vs. International, large vs. small, growth vs. value)

> Liquid vs. Illiquid assets

(marketable securities vs. illiquid private investments & hard real estate)

> What are the tax implications of liquidating existing investment holdings in taxable accounts?

After accounting for a healthy cash cushion (3-6 month emergency fund / cash runway)

AND

Necessary safety assets required for lump sum expenses (tax payments, down payments, etc), try to stay fully invested in the market with long-term oriented dollars

6. Check the boxes. Yes, those boxes.

Seriously, do it next month if you can.

If you have young children, start it next week.

> Complete your estate plan

These should be the legal documents you are considering (not all will apply):

Last Will & Testament
Power(s) of Attorney
Advanced Medical Directive (Living Will)
Revocable (Living) Trust

> Review beneficiaries across all accounts, including covered individuals under your benefits

> Review all of your insurance coverages, including employee benefits

...Life
...AD&D
...Health / Dental / Vision
...Disability
...Property & Casualty (Home, Auto, Umbrella)
...Renters

What fringe benefits at work are you not taking advantage of?

> Hire a CPA or engage a tax filing service for this upcoming tax season

If you do these 6 steps and take advantage of all available personal finance resources online, you will be MILES ahead of the majority of your peers

[Nikhil Abad @nikabad]

@markcecchini Happy birthday Mark. Have an incredible day and year ahead. 🎉

[Nikhil Abad @nikabad]

@markcecchini I’ll warn you.. I don’t think that phase will end anytime soon. 12 years here and still counting!

[Nikhil Abad @nikabad]

@markcecchini No idea you could do that. I have had to scroll (sometimes forever!) to get to something on your timeline if I hadn’t bookmarked it. Thanks for the tip.

[Nikhil Abad @nikabad]

@markcecchini Super cute ☺️
Enjoy these days, they go by fast!

[Nikhil Abad @nikabad]

@markcecchini Haha.. it’s just the beginning! There were days we watched it every single day, 1 with the older one and 2 with the younger one! 😂

Side note : after all these years, I can’t tell which part is my favorite 😅

[Nikhil Abad @nikabad]

@markcecchini Just make sure she doesn’t put any the dough through the kitchen sink 😀 Other than that, you’ll never buy or eat store bought bread again!

[Nikhil Abad @nikabad]

@markcecchini @matt_gottshall I’ve told you this before, your content is first class. So much one can learn and do just by even passively reading through it. Thank you!

[Nikhil Abad @nikabad]

@markcecchini We didn’t have name for him and she was into PJ Masks… “let’s name him Gecko” 😅

[Nikhil Abad @nikabad]

@markcecchini Congrats Mark!

[Nikhil Abad @nikabad]

@markcecchini One of the “joys” of being a parent :). Hope she feels better soon and you and the better half get some well deserved rest.

[Nikhil Abad @nikabad]

@markcecchini 🙋‍♂️… Quite often.

[Nikhil Abad @nikabad]

@markcecchini The next one with 4, in a few months, will be even more fun. :)

[Nikhil Abad @nikabad]

@markcecchini Thanks for sharing. Have some gaps in ours that will now be filled :)

[Nikhil Abad @nikabad]

@markcecchini Wow.. Is it the same room ?

[Nikhil Abad @nikabad]

@markcecchini Lovely! Hope she and you had a good time trick or treating :)

[Nikhil Abad @nikabad]

@markcecchini “Planning” means a whole new thing.. isn’t it ? 😜

[Nikhil Abad @nikabad]

@markcecchini @cfpmcecchini ✅