The Money Confidante
PART 2 of 2
Wealth management can for many reasons often present a challenge for lawyers, especially female lawyers, and never more so than in 2021. In Part I of this post, we acknowledged pandemic change, discussed delegation, and explored tax season. Here are three more key aspects of what wealth management should look like for female lawyers in 2021:
Maximize Your Savings: Know Your Limits!
Another change in 2021 is contribution limits to 401(k) [??] savings accounts. Make sure that you’re fully informed, and that you’ve used your income as efficiently as possible by maximizing contributions to savings accounts.
The contribution limits to 401(k) plans as well as IRAs have changed only subtly this year. 401(k) plans have retained the same $19,500 limit in place for 2020 for employees’ contributions, and catch-up contributions after the age of 50 have also stayed at $6,500. However, the amount that an employer can contribute has increased.
As part of your financial review, check other possible vehicles for saving. If you have children that you intend to send to college, you should maximize your contributions to a 529 plan. And if you’d like to make sure you’ve got some money set aside especially for medical expenses, make the most of a health savings account too. 2020 changed the eligible expenses that can be paid for by money in health savings account, so make sure you fully understand how they work and what they cover.
Wealth management and a robust financial plan should always take asset allocation into account. There is no point in having investment accounts if you don’t regularly review them and make changes so that your money is working as hard for you as possible.
If 2020 changed your financial landscape in any significant way, you may well want to make adjustments to your investment portfolio. This might mean adjusting your risk tolerance, but not forgetting to review your asset allocation and make changes if needed. This may well be something that you’ll want to talk through with a financial advisor.
2020 might have knocked the wind out of your sails a little financially, or it may have freed up a bit more cash. Either way, it may be reassuring to know that you have enough cash to manage if anything happens to your income. Generally, it’s a good idea to have six months’ fixed expenses available in cash at any one time. If you need to free up some capital, asset reallocation can be a good way of doing this.
Wealth Management for 2021: Adapt to Change
Wealth management for female lawyers in 2021 is going to hinge on your ability to react to change, as well as to accommodate changes that have already happened. If you let your finances slip by the wayside a little over the last year or so, don’t be hard on yourself – there was a good reason for that. Refocusing on your financial plan now will put you right back on track.
Enlisting the help of a financial planner who specializes in working with lawyers and other highly driven professional women can really help. Then you can be sure that they will understand the demands on your time and the unique challenges that you face. They’ll help you to manage your money efficiently, freeing up time to pursue your hobbies and to spend time with people you love, securing your financially stable future at the same time.
Bridget Grimes is a financial planner who helps female attorneys live the life they want by having a plan for the four financial derailers.