Making our Finances Shipshape for the New Year

After ringing in the new year and saying goodbye to last year, our attention naturally turns to the road ahead. Now that the real, or more likely virtual, confetti has settled, it is time to consider ways in which we can better our financial lives.

This, for many of us, may focus on our legacy and financial future. The new year is an opportune time to review our financial and estate goals to ensure that we are prepared for success.

Investments

The new year can be a great time to confirm that your portfolio allocation is aligned with your risk tolerance, investment goals, liquidity needs and that it is tax efficient. Without proper review and rebalancing throughout the year, your allocation can drift from its intended goal, especially following periods of market volatility. Periodic portfolio reviews, particularly with the help of a financial advisor, are important for managing risk and monitoring how you are tracking towards your goals.

Managing Spend and Getting Organized

Reviewing your expenses for the previous year and ranking your spend based on importance can help you find opportunities to reduce spending without reducing quality of life. Consider reviewing how much you contributed to savings or an employer sponsored retirement plan last year and try to identify ways to increase this number, if possible.

It can also be a good time to consider refinancing your mortgage. It is important that you take the time to understand all the expenses associated with a mortgage refinance, and that you carefully consider all the options and risks. A longer mortgage might make sense if your rate is attractive and you want to reduce the risk of higher rates in the future.

We often find ourselves busy and overwhelmed during tax season, scrambling to get our returns filed at the last minute. It can be very helpful to begin gathering your forms and receipts early so you are prepared to file when ready. This simple step to being prepared and organized can have a positive impact on both our financial and mental well-being.

Insurance

Review your casualty declaration pages to verify that your adequately insured in case of a disaster. It is particularly important to verify that your dwelling coverage is adequate given increasing costs to rebuild in the area. Make sure you have adequality documented your personal items for insurance replacement purposes; including appraisals if necessary.

Take note of your personal and financial assets as well as your income and review the liability coverage for your homeowners and auto policies, if applicable. If you have children who are 18 or over and they drive a car you own, discuss this risk with your insurance agent. Consider an umbrella policy for added liability coverage; or evaluate changes that might affect the amount of coverage you need relative to assets and income.

The possible need for life insurance should also be periodically assessed. We only recommend purchasing a life insurance policy if there is a clear and specific goal, such as income replacement. Having a policy in place may bring peace of mind for you and your loved ones.

Estate Planning

Taking the time to review your estate planning documents (e.g., Trust, Will, Medical Directives) is a crucial step in protecting your legacy and future. It is common to have estate planning documents prepared but not updated as situations and needs change. The new year can also serve as a reminder to confirm beneficiaries on all IRAs, employer sponsored retirement plans and life insurance contracts.

Goals

We strongly believe that setting financial, personal, health and family goals is important to the success of achieving our goals. Having goals and reviewing them periodically can help to influence and modify our thinking and behavior around spending and living a healthy lifestyle.

Following these guidelines can help you start your year right and bring confidence for the years ahead. Seize the opportunity to take control of your personal and financial future.

Caitlin Luttrell, CFP®

The opinions in this newsletter are those of the author and not necessarily those of Raymond James. Raymond James does not offer tax or legal services. You should discuss any tax or legal matters with the appropriate professional. Life insurance policies have exclusions and/or limitations. The cost and availability of life insurance depend on factors such as age, health and the type and amount of insurance purchased. Guarantees are based on the claims paying ability of the insurance company.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP^®, Certified Financial Planner^™,   and   in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.