BY STEVEN GALLO, CFP®
The beginning of the year is a good time to review your finances and make any course corrections necessary to achieve your financial goals. Here are four things you can do to help get your financial house in order.
- Calculate your personal net worth. It does not have to be complicated. Make a list of your assets (what you own) and liabilities (what you owe). Subtract the liabilities from the assets to determine your net worth. Do not panic if your net worth declines during tough market periods. What is important is to see a general upward trend over your earning years.
- Automate good habits. Take this moment, when you are feeling gung-ho about your finances, to automate any good behaviors you have committed to. If you want to save more for retirement or repay debt, automate those monthly debits with your payroll office or your bank. Do it now, while you are feeling motivated, so it does not get lost in the yearlong shuffle.
- Review beneficiaries’ designations on your retirement accounts, annuities, and life insurance. The beneficiary designation is your first defense line to ensure that your assets transfer to your heirs quickly. Keep information on beneficiaries up to date to ensure the proceeds of life insurance policies and retirement accounts are consistent with your wishes, your will, and other documents.
- Check your insurance coverage. Make sure you not only have auto and homeowners or renters’ insurance but also consider umbrella liability insurance, especially if your assets exceed the liability coverage provided by your other property and casualty policies. See what coverage you get for disability and life insurance from work and Social Security and purchase supplemental coverage if you need more. Finally, if you are in your mid-50s to 60s and have $200k-$2 million in assets outside of your home, you may want to consider purchasing long-term care insurance.
This is not an exhaustive list, but these are some of the steps you can take to strengthen your personal financial life. It is never too early or too late to organize and plan for the financial security of you and your loved ones.