As we near the end of the fourth quarter and subsequently the year, now is a good time for some self-reflection. We all have had triumphs this year, big and small, as well as defeats. The triumphs give hope for the future and what is to come and the defeats provide opportunity to learn valuable lessons. The promise of a new year with a clean slate offers the incentive to ensure you act on promises that maybe you failed to keep this year. In that same light, as you make your resolutions for the New Year, do not leave out either fixing bad financial habits or building on pre-established good ones. Today I am going to give you 5 activities, varying in complexity and dependent on situation, for you to act on over the next year to help solidify your financial future.
1. Get Started – Open a retirement account
Obviously this does not apply to those of you reading this that have already gotten started, but for those of you who haven’t this is a call to action! There is no age at which it is too early to start putting money away for retirement. As we talked about this recently in a video, the earlier you start investing the better off you will be in the long run. Opening an IRA is simpler than many realize and you do not need Warren Buffet type dollars to do it. Make it a priority this year to reach out and seek information on individual retirement account options and how to open one.
2. Review your current contribution level – are you contributing as much as you can?
Opening and contributing to an individual retirement account is great. Contributing to your company’s 401k and taking advantage of their matching is great. But, are you contributing as much as you can? Humans are creatures of habit. We tend to leave things unchanged if there isn’t an immediate problem. “If it ain’t broke don’t fix it” is the old adage. While this statement holds up in many cases, it is not a valid reason to avoid making changes that will positively affect your future. Review your current contribution levels in your individual and work-related accounts to see if you are contributing to retirement as much as you can afford to.
3. Review your life insurance coverage
Life insurance is not a fun topic for anybody to discuss, not even the people who make their living selling it. But, it can be a necessary topic of discussion with people who do not have the liquid assets to withstand the sudden loss of a loved one. Check to see how much coverage you have on yourself or your spouse. Is that coverage amount still adequate in relation to your current expenses and level of income? Make sure your loved ones are covered in the event of your untimely death.
4. Review your estate
Another gloomy, yet necessary, topic is planning your estate with a will and/or trust. Your children, if you have any, are important to you. Your spouse, if you are married, is important to you. Your money and assets, in hopefully a much lesser sense, are important to you. A will and a trust delineate who gets what in regards to money, possessions, and guardianship over children who are minors. If you haven’t already, now is the time to start researching this topics and reaching out to professionals who can help you establish necessary measures.
5. Review your financial goals
One of the main parts of the financial planning process is setting distinct and attainable goals. A favorite quote of mine when talking about goals within your financial plan is this: “A dream written down with a date becomes a goal. A goal broken down into steps becomes a plan. A plan backed by action makes your dreams come true.” – Greg Reid. I know the ending feels a bit fantastical, but you get the premise. Make sure you have goals, and make sure the ones you have still fit the plan you have for your financial life. You change, make sure your goals are aligned accordingly. Hold yourself accountable to acting out those goals so that your financial plan comes to fruition.
Hopefully you can act on at least one of these activities in the next 365 days and help create a better financial future for yourself.
This week’s song is Christmas related, tis the season after all. Also, we are past Thanksgiving now, so I believe it is permissible to start listening to this sort of thing. Enjoy!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.