If you’re anything like me, you find yourself creating a list of “New Year’s Resolutions”. For 2014, allow me to challenge you to think about five financial resolutions that can be clearly defined, easily measured, and with some knowledge and motivation, completely attainable. Pick and choose the resolutions that would impact your financial life this coming year, and celebrate the ones you’ve already “resolved.”
1. Estate Planning Documents: Yes, you’ve heard it from us before. If you haven’t yet met with an attorney to draw up the appropriate estate planning documents, PLEASE do it in 2014. The sooner the better! Having an estate plan in order will help you control what happens to your assets should something happen to you (your kids included), will mitigate estate tax consequences, and will protect your loved ones from the pains of probate.
2. Develop and Stick to a Budget: Whether you make $10,000 per year or $1,000,000 per year, a budget will help you spend less than you make and know where it’s going before you make it. There are a number of budgeting tools out there to help you along the way. Whether it’s the envelope system or the personal financial website that we offer to our clients, utilize something that works for you and helps keep your spending where you’ve determined it needs to be.
3. Get Serious About Getting Out of Debt: Yes, each situation is different, but in most cases and for most people, debt is a hurdle that keeps them from living life to the fullest. It’s a ball and chain that can slow you down and keep you from running after your dreams. Will it be painful to reallocate money from your budget to pay off debt? Yes, it will. Will it change your life for the better? You better believe it!
4. Get Insured: If your investments aren’t adequate to replace your income should you die unexpectedly, do yourself and your family a favor and purchase a term-life insurance policy. Term insurance is a fairly cheap insurance that is simple and easy to understand. You pay a premium payment for some defined period of time, and if you were to die during that term, your beneficiaries receive a guaranteed lump-sum payment determined by the policy terms you purchased. The younger and healthier you are, the cheaper it is. For example, I just worked with a young family in their early thirties, and $1,000,000 of a thirty-year term life will cost them about $70 per month. If you’re a young family with kids, this should be a no-brainer. Please protect your family, and act on this resolution soon.
5. Work with a Fee-Based, Fiduciary, Wealth Manager: Having your own personal CFO working alongside you to help think through and accomplish all of the financial resolutions you have now and in the future is vitally important to your long-term financial success. If you’re not currently working with a someone or would like a second opinion, please let us know, we’d love to speak with you about how we could help you accomplish all your financial goals.
As you start off the new year and reflect on what changes you’d like to make, I hope that you consider this short list so that, by next year, you’ll have accomplished your financial resolutions.
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