Ring in the New Year with a Financial Check-up

January is a great time for an annual financial check-up. These five steps can help you plan for your future:

  • Construct your balance sheet: List assets held in brokerage and savings accounts, college savings and 401(k) plans, insurance policies, and real estate. Then, list your liabilities including your mortgage, auto loans, and credit cards. This exercise may generate a to-do list. Maybe you’ll want to up your 401(k) contributions or attack consumer debt.
  • Update your budget: You need to plan for any life changing events on the horizon–the birth of a child, a new home, children going to college so you can continue to fund what matters most to you.
  • Check your emergency fund: In the wake of the recession and with unemployment still high, it’s absolutely necessary to keep six months of your current income in a liquid, interest-bearing account to manage unexpected expenses or a job loss. If you dipped into your emergency fund last year, replenish your account.
  • Check your credit score: Routine credit checks uncover costly mistakes and can protect you from identity theft. You can request your report for free, once a year. Contact any of the three major credit agencies: Equifax, 800-685-1111; Experian, 1-888-397-3742; or TransUnion, 800-888-4213 or visit them online.
  • Review your legal documents: Take a look at your will (or trust), power of attorney, and advance medical directive. Also, as retirement accounts and life insurance normally pass outside of your will, you’ll want to check that your named beneficiaries still reflect your wishes.

An independent financial advisor can answer any questions on the above or other matters that you have as you review your financial situation in the New Year!  Happy New Year!

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