Ask the Maine Experts: How to Plan Your Financial Future

Peter Nicholson, senior portfolio manager at First National Wealth Management, shares his tips for rethinking your finances.

Peter Nicholson, senior portfolio manager, First National Wealth Management
Peter Nicholson, senior portfolio manager, First National Wealth Management. Photographed by Ashley Conti.

The pandemic has upended every aspect of everyday life, including the best-laid plans for saving, retirement, and covering kids’ college tuition. In the past year, Peter Nicholson, senior portfolio manager at First National Wealth Management, a unit of First National Bank, has seen a rush of clients rethink their finances. “The year 2020 was crazy,” Nicholson says. Here are some tips on how to navigate these tricky times.

What are some key takeaways from 2020?

Everyone needs an emergency fund. That’s your foundation in any kind of environment. As a rule of thumb, you want to have three to six months of cash that you can easily access without tax consequences at any time. If you don’t have that cushion, and something unexpected happens, like a job loss, you’ll have a difficult time financially. You also need to have a will. It doesn’t matter how old you are, because you never know what’s going to happen — 2020 reminded us of that.

What are some common pitfalls to avoid?

You don’t want to panic-sell when the market is down. Irrational decisions like that can really derail your financial future. Any decisions you make about investments should be based on a longer-term plan, not the market’s performance on one day or during one week. A financial advisor can look at your unique circumstances, your goals for retirement, and help you rebalance your portfolio, trim your investments, diversify, and lock in your gains to keep you on track.

Are there certain opportunities to take advantage of right now?

During this time, when you’re going out less, thus spending less money at restaurants and on entertainment, you have an opportunity to save more and take advantage of powerful savings and investment vehicles to shore up your emergency funds and build a nest egg. A financial advisor can guide you to the best tools to help you work towards your goals for one year, five years, or longer. That advisor will help you stay on track and be there if things get difficult.

What other steps are worth taking?

It’s never been more important to hammer out a financial plan that takes into account your income, taxes, insurance, investments, and will, so you can cover your current expenses and work towards your long-term goals. Without that, it’s like being on a ship without a rudder. It’s daunting, but you don’t want to be surprised down the road, and look back and say ‘I should have done this.’

First National Wealth Management, a division of First National Bank, 102 Main St., Bar Harbor. 866-563-1900.