Contributed by: Kali Hassinger, CFP®
There's no better time than a fresh decade to begin making plans and adjustments for your future. Although we may think of the New Year as a time for "resolutions," it's important to focus on actionable and attainable goals, too. Instead of setting a lofty resolution without a game plan in mind, might I suggest that you consider our New Year Financial checklist below? If you get through this list, not only will you avoid the disappointment of another forgotten resolution in February, you'll feel the satisfaction of actually accomplishing something really important!
Review your net worth as compared to one year ago, or calculate your net worth for the first time! Regardless of how markets perform, it's important to evaluate your net worth annually. Did your savings increase or should you set a new goal for this year? If you find that you’re down from last year, was spending a factor? There’s no better way to evaluate than by taking a look at the numbers!
Speaking of spending and numbers, review your cash flow! How much came in last year and how much went out? Ideally, we want more coming in than is going out!
Now, let's focus on the dreaded budget, but instead we’ll call it a spending plan. Do you have any significant expenses coming up this year? Be prepared by saving enough for unexpected costs.
Be sure to review and update beneficiaries on IRAs, 401(k)s, 403(b)s, life insurance, etc. You'd be surprised at how many people don't have beneficiaries listed on retirement accounts. Some even forgot to remove their ex-spouse!
Revisit your portfolio's asset allocation. Make sure your portfolio investments and risks are still aligned with your life, goals, and comfort level. I'm not at all suggesting that you make changes based on market headlines, but you want to be sure that the retirement or investment account you opened 20 years ago is still working for you.
Review your Social Security Statement. If you're not yet retired, you will need to go online to review your estimated benefit. Social Security is one of the most critical pieces of your retirement, so be sure your income record is accurate.
Of course, this list isn't exhaustive. Reviewing your financial wellbeing is an in-depth process, which is why the final step is to set up a review with your advisor. Even if you don't work with a financial planner, at a minimum set aside time on your own, with your spouse, or a trusted friend to plan on improving your financial health (even if you only get to the gym the first few weeks of January).
Kali Hassinger, CFP®, CDFA®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.
Any opinions are those of the author and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.