How to Future-Proof Your Finances with a Certified Public Accountant

Your finances are the foundation for your future. Having a strong financial strategy allows you to weather life's storms and take advantage of new opportunities. Working with a certified public accountant (CPA) can help you build resilience into your finances to prepare for whatever the future may bring.

Assess Where You Stand Today

The first step in future-proofing your finances is to understand your current financial situation. A CPA can analyze your income, expenses, assets, liabilities, insurance coverage, estate plan, investments, taxes, and other aspects of your financial life.

This assessment identifies strengths to build on as well as vulnerabilities to address. It also benchmarks where you stand today so you can measure progress.

Examine Spending and Budget

A CPA can review your spending habits and create a budget that maximizes savings. This includes looking for ways to reduce expenses without sacrificing quality of life.

Proper budgeting ensures you live within your means and directs surplus funds into savings and investments. It also helps you prepare for changes down the road, such as reduced income in retirement.

Assess Asset Protection

CPAs help safeguard your assets from risks like lawsuits, accidents, and natural disasters. Proper insurance coverage on your life, health, home, auto, and personal property is essential.

Estate planning strategies such as trusts and beneficiary designations also ensure your assets transfer according to your wishes if something happens to you.

Evaluate Income Sources

Today’s income funds tomorrow’s expenses. CPAs help diversify your income to withstand dips in any one stream. This can include generating rental income or residual business income.

CPAs can also help you maximize Social Security benefits and structure retirement account withdrawals to last your lifetime.

Audit Tax Strategy

CPAs are experts at identifying tax savings opportunities. This includes taking advantage of retirement accounts, Health Savings Accounts, deductions, credits, and income tax planning.

Effective tax planning puts more money in your pocket both now and in the future. CPAs stay up to date on the latest tax laws to benefit their clients.

Optimize Your Financial Foundation

Once you understand your finances, a CPA can take steps to optimize your financial foundation for the future. This provides stability and flexibility to adapt as life unfolds.

Build Liquidity

Liquidity means having access to cash when you need it. CPAs recommend keeping 3-6 months of living expenses in an emergency fund. This liquidity cushions you from unexpected expenses or income disruptions.

CPAs can help you structure your finances to build an emergency fund. This may include budgeting, debt reduction, expense cutting, or redirecting additional income into savings.

Mitigate Risk

CPAs help construct an integrated risk management plan using insurance, legal protections, and business continuity protocols.

This ensures you have safeguards in place to buffer against property loss, death, disability, lawsuits, cyber threats, natural catastrophes, and business interruptions. Addressing these risks gives you greater peace of mind.

Automate Finances

CPAs can set up automated processes for bill payment, asset transfers, data backups, and other financial functions. This reduces time spent managing money and minimizes mistakes caused by doing tasks manually.

Automation also ensures critical financial steps continue if you become injured or pass away suddenly. Smart automation gives you financial security.

Plan Strategically for the Future

CPAs help you make smart financial decisions to accomplish future goals like retiring comfortably, paying for your child’s college, starting a business, or leaving a legacy.

Project Cash Flow Needs

A CPA can forecast future income and expense needs for objectives like retirement or college savings. This projection shows how much you need to save each year to reach your goals.

CPAs stress test the projections under different market return scenarios to build in a margin of safety. This helps ensure you save enough even in down markets.

Align Investments

Your investment portfolio should align with your risk tolerance and goals. CPAs recommend diversified, low-cost index funds to meet most investors’ needs.

More complex assets like rental property, businesses, or alternative investments require special expertise. CPAs help structure these appropriately and understand their impacts on your finances.

Make Strategic Tax Decisions

CPAs model the tax implications of financial decisions. This prevents choices like selling investments or converting a traditional IRA to a Roth from backfiring due to taxes owed.

Proper tax planning around investments, estate planning, real estate, and business ownership can save you tremendous amounts over your lifetime.

Continuously Monitor and Adapt

The financial planning process doesn’t end after putting a plan in place. Your CPA monitors progress and adapts the strategy as needed.

Review Changes Annually

Your CPA should review your situation at least annually to identify changes impacting your plan. This includes shifts in your income, marital status, dependents, health, career, or goals.

The CPA then adjusts your financial blueprint accordingly to keep you on track. Think of it like an annual checkup and tune-up for your finances.

Revisit Assumptions

Initial projections make assumptions that may prove incorrect over time, such as investment returns or inflation rates. Your CPA revisits the underlying assumptions to see if the plan needs revising.

Course correcting earlier rather than later gets your finances back on a prudent path before small deviations become major problems.

Make Tactical Adjustments

Along the way, your CPA will recommend tactical shifts as circumstances warrant. This may include revisiting your asset allocation, redirecting surplus cash into different priorities, or adjusting retirement account contributions based on changes in your tax situation.

Having an expert in your corner provides financial flexibility and peace of mind.

Partner with a CPA for Financial Resilience

Taking the right steps today allows you to prepare for a range of possible futures. A Certified Public Accountant can help you analyze, optimize, strategize, adapt, and remain resilient no matter what lies ahead.

If you seek to future-proof your finances, contact CartierCPA for CPA services. Our experienced CPAs work as strategic thought partners to help you achieve financial security and peace of mind.

Contact us today, at Cartier CPA's our goal is to provide clients with the highest level of respect and quality of service.