There is so much more to investing than just investing. To do it well requires consistency, a repeatable process, and an awareness of taxes, liquidity, and a desired timeline. Staying patient, flexible, and having a good temperament also creates a solid foundation to build from.

There are a lot of ways to be successful at investing and an equal number of ways to screw it up. Here are three underrated skills that don’t get enough attention. Personalizing these themes may better prepare you for what comes next.

Cashflow drives all stages of life, yet it stays opaque as most spending has migrated to credit cards. Often, it’s only when the email arrives with a balance due that an accurate reflection of charges can be identified. Debit cards offer an updated vantage point on spending based on the available cash left in your bank account. Our family has used both approaches; neither is better than the other. What matters is finding the best system that works for you.

Learning how to spend your money sounds elementary, but it does take practice and communication with a significant other. This seems so basic but is the cornerstone to becoming a successful investor. If you haven’t quantified how much it takes to run your financial house, this is a great place to start. This includes leaving room for error and opportunities as spending is rarely a straight line. Without this consideration, investing will be defined by accumulating more.

More can be dangerous as emphasis is placed on outcomes, most of which are out of your control. Cashflow and spending should be understood first, before investing, so you have a purpose for what you are trying to do. Many have this sequence backwards.

Spending is personal and sticky, it’s possible your habits are the same as they were ten years ago. Calling a time out to reflect on spending can provide perspective. This supports clarity on what sustainable spending means to your family and helps define what “enough” looks like. Ultimately this is what allows you to get closer to controlling your time and schedule. Cashflow drives everything.

Federal income taxes are a necessity and need to be integrated into cashflow and planning.  Underpayment penalties were nominal in recent years as interest rates remained low. Today, higher interest rates mean underpayment penalties are now 8%! This penalty is getting very close to what’s assessed if you remove money from a retirement plan before the appropriate age.

Review your 2023 tax return, page two, line 37—the amount you owe. How short were you? Now login and check a recent paystub, how much Federal income tax (exclude Social Security & Medicare) is being captured? Add in a spouse’s withholding too for the right family snapshot. In most cases, employees, partners, and owners should be withholding more via their W4 or quarterly estimated payments.

This exercise is especially important for those who choose to retire midyear, those changing jobs, and individuals with bonus or incentive comp. If your spouse decides to retire before you do, a quick calculation on withholding will be time well spent.

It’s surprising, though it shouldn’t be, how many retirees underpay taxes leading up to and into the first year or two of retirement. There is a lot of change taking place, both in time and income, as retirees adjust to their new schedule. Add in downsizing, moving, or building a home, and taxes often get brushed off until April or October. This is unfortunate but offers compelling rationale to open the communication lines with a financial planner before retirement.

Reviewing account titling on your investments, home, cars, bank, and retirement accounts makes a difference. Some accounts simply can’t be owned jointly. Here, adding TOD/POD, known as transfer on death or paid on death beneficiary elections ensures the right people get the right stuff, at the right time.

Over the years it’s easy for accounts and property to miss beneficiary assignments or require titling updates. Our family has been using a revocable trust for over twenty years. This has streamlined what we own and how we have it titled. Working with an estate attorney to understand how this may integrate into your family’s financial house might be valuable too.

Managing cashflow, checking the math on taxes, and double-checking account titling are a few extra steps that may strengthen your financial future as you think beyond investing. These topics deserve more recognition and integration in financial planning and strategy conversations.

Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Flowerstone Financial are not affiliated. Cambridge does not offer tax or legal advice.

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