Financial resolutions aren't just for the new year

The end of another year provides an opportunity to reflect on your financial accomplishments and focus on those areas which can be improved upon. If you’re not someone who routinely sets New Year’s resolutions it is still worthwhile to spend time to revisit your finances to ensure your financial foundation is not compromised. Even small changes from year to year can culminate in financial risks that aren’t readily apparent.

Financial resolutions often center around spending less and saving more. While it may be sensible to prioritize how to improve in these areas in the upcoming year, there are other financial aspects which deserve attention. For example, increasing your contributions to your company’s retirement plan may certainly be advantageous to you.

However, if you haven’t secured appropriate insurance coverages and essential cash savings, you may find yourself in a pickle should an unforeseen event occur requiring substantial out of pocket expenses. Scenarios such as these occur more frequently that you might expect.

The following three areas are relevant to most everyone and can result in unintended consequences when overlooked.

Revisit your insurance – life, health, property and disability.

Is your life different than it was a year ago? How about five years ago? Ten years ago? The song lyrics “Changes aren’t permanent, but change is”1 are very relevant here. If it’s been awhile since you’ve examined your life insurance coverage and you’ve experienced a life event such as marriage, the birth of a child or a home purchase, this applies to you. The same goes for health and disability insurance.

Property insurance, such as home and automobile policies, should be reviewed to ensure the appropriate amount of coverage is in place. It is common for these policies to regularly renew without much thought given to if the coverage remains suitable for your circumstances.

Variables such as home improvements, length of ownership and financial resources impact how much property insurance coverage is appropriate. If you’re unsure how to determine what is right for you and your family, don’t take it upon yourself to figure it out. Consult a financial professional for help.

Create – or update – your estate plan.

What do Martin Luther King, Jr., Abraham Lincoln and Jimi Hendrix have in common? Aside from being household names, they all passed away without a valid Will in place. James Brown, Heath Ledger and Jim Morrison also share something in common – each of their estates were embroiled in legal battles after their death, despite each having drafted their Will. You don’t have to be a celebrity with vast amounts of wealth for estate planning to apply. While death is a certainty for all of us, it is not pleasant to think about much less plan in advance for. However, estate planning is as much about those you leave behind as it is you. The mistake these six individuals made was to neglect the impact of their death on their family & friends. Consequently, the pain & grief associated with the legal proceedings of dying intestate, or without updated documents, only added to that already being experienced. Mistakes like these are avoidable with good planning. Don’t let this be the reason you have something in common with these six.

Secure your financial information – online and at home.

Financial fraud continues to rise largely due to the increased use of the internet to conduct financial business and the failure of consumers to adequately protect their information. Spend time to assess the strength of the credentials used to access each of your online accounts. Improve your password strength and don’t use the same password for every site. When available, sign up for 2-factor authentication. This additional security measure is for your protection and worth the minor inconvenience of additional time required to login. Close online accounts you no longer use and be sure to confirm with the financial institution or merchant. Invest in a fireproof filing cabinet with a lock for files kept at home. Files that are important and not necessary to retain as hard copies can be scanned into a cloud storage system or onto a thumb drive, but make sure either of these is secured by strong credentials. Lastly, invest in a micro-cut paper shredder to eliminate those documents no longer needed and those arriving by snail mail.

Revisiting these areas of your financial life presents an opportunity for improvement by eliminating any shortcomings that may adversely impact you and your family. As with many New Year’s resolutions, getting started is often the hardest part. Making time to proactively address these areas will reduce the time necessary to fix mistakes down the road. If you’re feeling overwhelmed or could use assistance with prioritizing, reach out for help. It’s not necessary to wait until January 1st to begin. Carpe Diem.

1Rush. “Tom Sawyer”. Moving Pictures, 1981.

Securities offered through Rehmann Financial Network, LLC, member FINRA/ SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group.

Published in Wealth Management

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