New Year. Fresh Start. Along with your resolution to eat better and exercise more, add to your to-do-list for 2014 these financial goals
Review Your Financial Plan
You can’t get where you want to go without a plan. That’s why you’ll get the best results for yourself this year if you create a financial plan, or update it if you already have one. As you do, ask yourself:
- What are my income sources this year and how much do I expect to earn?
- What big expenditures am I planning for this year? Do I have the money to cover them?
- What are my financial goals, and how do I plan to get there?
With those questions on the table, you’ll be ready to create a blueprint that will help you achieve your goals for the year. Whatever your plan may look like, however, we strongly suggest you consider adding these items to your list:
Reduce Your Debt
Debt is a burden that can stand in your way of achieving your other goals. While for many of us, a mortgage on our home is a fact of life, other forms of debt, such as credit card obligations, are costly and eat into our disposable income. Make this the year that you focus on eliminating as much of your credit card debt as possible.
Estimate Your Taxes
The only reason to dread tax day each year is if we haven’t adequately planned for how much we’ll owe. Getting back a fat refund may make you feel good, but keep in mind that if you are paying too much, you are essentially granting the government an interest-free loan on money you could put to better use. On the other hand, under-withholding your taxes can result in a big tax bill, along with interest and penalties if you’ve seriously underpaid your obligation. So, at the start of the year, sit down with your tax professional and estimate what your annual tax bill will be and set your withholding or savings goal accordingly.
Build an Emergency Fund
One of the big reasons people take on unplanned debt is an unexpected and costly emergency. That’s why having an emergency fund will not only give you peace of mind, but will also help you keep costs down. At the very least, having a few months’ net income set aside will give you a safety net should illness or injury keep you out of the workforce. To help you survive other types of emergencies, consider our next recommendation.
Review Your Insurance Coverage
Having the right amount of the right kind of insurance protection can make all the difference in the world in how well you recover from loss. That’s why at the beginning of each year you should sit down with your insurance professional to evaluate how well you are protected in these areas:
- Property and casualty coverage
- Auto insurance
- Disability protection
- Income protection
- Long-term care coverage
- Catastrophic care
- Life insurance
Follow Your Savings Goal
Many of our goals in life require money, lots of it. From buying a first home, sending a child to college, or our own retirement, we need ample savings to make these dreams a reality.
Once you know how much you need to save to meet your short-term and long-term goals, build automatic savings into your financial plan. Pay yourself first with automatic savings withdrawals or deposits to your investment or retirement accounts.
Save for Retirement
Whether you are a young adult cashing your first paycheck, a mid-career professional with retirement on the horizon, or a retiree already enjoying the rewards of your hard work, you should be setting aside or maximizing your funds for retirement.
Young adults have the advantage of time to help fuel the growth of their retirement savings. Starting early means you can put away a little each month to see big returns by the time you hit retirement age.
If you’re getting a late start, not to worry. You can take advantage of make-up provisions for qualified plans and other strategies for building retirement funds quickly.
And if you’ve already retired, there are lots of strategies you can employ to protect your retirement funds to ensure they last as long as you do.
Update Your Estate Plan
If you don’t have an estate plan, or have one that needs updating, then put this task at the top of your list. An estate plan isn’t just for the rich worried about avoiding estate taxes. An estate plan is a gift you give to those you leave behind that will spare them difficult personal and financial decisions during their time of grief.
We’re Here to Help
Of course, we’re here to help you with each one of these items on your to-do list. From helping you set goals, to creating a plan to attain them, we’re here to help you every step of the way!
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