Testing Your Resolve

Now that the ball has dropped in Times Square it is time for another annual tradition – New Year’s resolutions.  So, along with improving your diet and exercising more, consider adding these:

“Will” you? – I have lost count of how many clients with whom I have met that have a spouse, children, and substantial assets but an outdated or even no will at all.  There are vast dangers in ignoring estate and probate law – failure to be proactive can have catastrophic results.  Skilled professionals can ask you the right questions and help you avoid these potential pitfalls.  If you have not updated your will in some time, you should speak with an attorney.

An end to debit cards – Financial institutions have created a convenient method for you to pay for your purchases.  Unfortunately, aside from that convenience, there is virtually no other reason you should ever use a debit card.  Firstly, you are granting a vendor access to your checking account at the point of sale – seldom a good idea.  Secondly, in the event of a dispute with the merchant, you will have far less recourse if the charge has already hit your account.  Finally, you are far better off using a credit card that can protect you as a consumer and offer you rewards for card usage.

Maximizing your retirement – Yes, I am referring to 401k and other employer-provided plans but you have many other options as well.  Although you may not be entitled to a deduction, you can contribute into your IRA each year.  In fact, you may qualify for a “back door” Roth IRA contribution which can be very valuable.  Further, maximizing contributions into HSA accounts can be very beneficial in the long run. 

A real plan for education – If you have at least one child, it is crucial to have a calculated plan for financing their education.  To begin planning, you should have a sense of what schools they might attend, the current tuition and fees for those schools, and the appropriate rate of inflation so that you can estimate the overall costs.  I encourage my clients to have a multi-pronged approach to education planning which can include 529 savings plans, taxable investment accounts and, if necessary, home equity and earned income savings.  Assess the costs, adopt a savings plan that works, and stick to it.

Investment allocation – It is a very good idea to review all of your investment accounts to be sure that the securities you hold align with your goals.  Your account allocation should reflect your objectives, risk tolerance, and future anticipated income.  If you are unable to say with confidence how your 401k account is being invested, then you definitely need to investigate and make adjustments.  This also applies to any other account including IRA’s, taxable accounts and 529 accounts for your children.

No matter how you may feel about your financial situation, you have a far greater chance of achieving your financial goals if you begin the planning process earlier.  Not everyone has the proper appreciation of exactly how much they will need for their children’s education or for their own retirement.  Unless you have already calculated these numbers with a great deal of thought, you will likely benefit from meeting with a financial planner.  But before you do, jot down your goals and start thinking about adding one or two items to your 2017 resolutions.