A new year is a great time to hit the reset button, get a fresh start, dream big and accomplish those big goals you have set for yourself. Improving your financial situation may not be on the top of your list but here are 7 (although I could have listed 17) easy money resolutions to add to your list for 2017. Anything you can do to improve your finances and net worth from year-to-year will set you in the right direction to financial freedom.
Set Savings Goals
You know how you earn a big discount when you’re able to pay your auto insurance and homeowner’s insurance in full? Companies prefer to be paid in full so having cash on hand gives you much better leverage (and discounts) than putting yourself on their monthly payment plan. Having multiple savings accounts assigned to certain goals allows you to be more prepared for those expected expenses, such as insurance and property taxes, as well as unexpected expenses, like an auto repair or medical bill. For every expected expense, figure out how many pay checks you have between now and the bill’s due date and set up an automatic transfer to make sure you have the cash on hand when you need it. For those unexpected expenses, make an estimate based on what happened last year and continue saving into your general emergency fund to bulk up those recommended amounts of 3 to 6 months worth of expenses.
Find The Best Rates
Try using a website like Bank Rate to compare the best rates available. You can compare everything from savings accounts, auto loans, mortgage rates, and credit cards. Taking just a few minutes to compare what is out there can yield you a higher interest rate and possibly even lower the rate on any debts you are paying. This is a quick and easy way to improve your finances.
Consolidate Your Retirement Accounts
You may have an Individual Retirement Account (IRA) with a brokerage firm, another IRA at a bank, and then possibly a couple of old 401(k)s that are still sitting with your old employer. How can you be sure these are being managed efficiently and cost effectively when they are all over the place? Is each account being charged a fee? What is that fee? How are they being invested? In order to simplify your finances (and to ensure there aren’t too many cooks in the kitchen regarding your investment strategy), combine your retirement accounts in one place. When they are one place you can get a good handle on your investment strategy and ensure everything is working towards the same goal.
Review Your Beneficiaries
Life is always changing whether that is due to marriage, babies, divorce, or the other million possibilities. Too many times I’ve seen retirement accounts with no beneficiaries listed or an ex-spouse listed on a life insurance policy. Having a beneficiary listed means your retirement accounts avoid the probate process which means it saves time, it saves money, and allows your beneficiaries to quickly take ownership of the account during a highly stressful and emotional time. Periodically review your beneficiaries to make sure that when the unthinkable happens, your loved ones are cared for.
I am a big fan of term life insurance and disability insurance and I have always used USAA‘s products to fill my needs. It is something that gives you a lot of protection in exchange for a small fee. When you are young, building your assets and growing your family, it is natural to have some debt to help fund your new beginnings. The problem is that many people don’t consider the very real possibility of a disability or even worse, death. If you are not able to work and have medical bills piling up, or if you are no longer around to bring in income to support your family, how are your spouse and children going to stay in their home, keep their vehicles, or go to college?
Many employers offer life insurance and disability but I typically recommend purchasing your own individual policy. A 20 or 30-year life policy, especially purchased when you’re young and healthy, will give you a fixed premium that will not change regardless of your age or whether you switch employers. The idea is that after 30 years when your mortgage and other debts are repaid, and other assets have accumulated, you will no longer have such an immediate need for life insurance. The same goes for a disability policy, typically not changing regardless of whether you change employers.
Set Up Your Will
If you have minor children, possessions that you value, or any specific wishes to be honored after you’re gone, you need a will. It doesn’t matter if you are 25 or 85, I repeat, you need a will. A will is basically directions for the loved ones you leave behind otherwise it will be the court’s job to decide what happens with your stuff, AND your children (gasp). You can easily set up a basic will online through a website such as Legal Zoom or ask a trusted source for a referral. If you’re in West Texas, I can give you a couple of great local referrals. I lost my brother earlier this year and although I already knew the importance of estate planning, losing him put all of it in a much different perspective. Take the time and get a will.
I get that everyone isn’t thrilled about finance as I am but that doesn’t mean you should completely avoid it! Read other personal finance blogs, look up terms you don’t understand on investopedia, or challenge yourself to increase your net worth by a certain percentage this year! If you’re a competitive person, I promise you that those challenges you set up for yourself will motivate you to find more information out there. As far as blogs go, here are a few of my favorites! Mixed Up Money, Early Retirement Now, And Then We Saved, and many, many more!
Good luck on all of your New Year’s resolutions and I hope that at least a few of these will make it to your list. I pray that 2017 is the year that you crush your money fears, that you make progress on all of your financial goals, and that we all learn how to become better stewards with what God has given us. Happy New Year!!
Disclaimer: I am a CERTIFIED FINANCIAL PLANNER TM (CFP®), but I am not your CFP® or financial advisor. The information in this article is for general informational and entertainment purposes only and does not constitute financial advice. This article does not create a financial planner-client relationship. The author is not liable for any losses or damages related to actions of failure to act related to the content in this article. If you need specific financial advice, consult with a licensed financial advisor or CFP® who can tailor advice regarding your specific circumstances. Additionally, sometimes I use affiliate links to support my website. This means I may earn a small commission, which is no additional cost to you, for referring and discussing products and services that I personally use, or have used, and trust. Thanks for your support!