According to a study conducted by the University of Scranton’s “Journal of Clinical Psychology,” 45% of Americans make New Year’s resolutions. Sadly, only 8% of Americans can achieve them. The beauty in making New Year’s resolutions is that you get a fresh opportunity every year. Below are a handful of Financial New Year’s Resolutions that can help improve your financial health.
Review and Update Your Financial Goals
During 2019, your financial situation certainly changed, even if in the slightest. As we look toward 2020, take time to ensure you are still on track to meet your financial goals. Are you saving enough for your retirement? Have you contributed to your children’s or grandchildren’s 529 plans? Do you need to make any other changes or updates to your short-term, mid-term, or long-term goals? It is important to verify that the goals you have set are still realistic for your circumstances.
Review Your Estate Plan
Estate planning is not just for the ultra-wealthy. There are simple steps and documents that everyone should examine to ensure their estate planning is in order. Review, and update if necessary, your will, health care directive, health care power of attorney and financial power of attorney. Make sure your beneficiary designations on retirement accounts, life insurance policies, and annuities are accurate. Consider whether a trust would be of benefit to your estate plan.
Review Your Insurance Coverage
Risk is present throughout our lives and insurance is a vital tool to assist in mitigating the financial impact an adverse event could cause. Review your health insurance, life insurance, long-term disability insurance, property-casualty insurance and your homeowner’s insurance policy to ensure they still match your needs and you understand what is covered and what is not. You may also want to consider long-term care insurance and a personal liability umbrella policy.
Review Your Retirement Savings
If you can save for your retirement through a retirement plan sponsored by your employer, the new year represents a great opportunity to review how much you are contributing to your account. If you got a raise, you may consider increasing the amount you contribute. If you are self-employed, you may be able to contribute to SEP IRA’s, profit-sharing plans, or individual 401k’s. Outside of work, you may be able to make additional contributions to IRA’s. If you will be over the age of 50 by December 31, 2020, you can contribute additional money to your retirement accounts.
Review Your Credit Report
You are entitled to three free credit reports each year, one from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. Check to ensure your credit report is accurate as errors on these reports are not uncommon and will adversely affect your score. Good credit can help save you thousands in the form of lower interest rates and better approval odds for credit cards and other loans.
Going into the New Year offers us all a chance to reexamine our financial health, identify any areas where we fell short, and make the necessary changes to be better in 2020.
As always, if you have questions specific to your situation, please do not hesitate to contact us.
Sources: Investopedia, Schwab
*This article is provided for informational purposes only and should not be interpreted as investment advice.