The start of a new year provides a great time to think of ways to build on your progress from the previous year. This often comes in the form of New Year’s Resolutions. If you’re looking to include personal finances in your New Year’s Resolutions, here are five ideas for you.
- Review 2023 Expenses & Budget for 2024
Take some time to sit down with yourself or your partner to review your expenses for 2023. When reviewing your expenses, look for the categories you spent the most in to see if they align with what you truly value. If your spending is not aligned with your values, try reflecting on ways you can align your spending with your values. For example, if you value health, your spending could be on gym memberships, healthy groceries, running shoes, and other items in that category.
For a large expense coming up this year, don’t put off planning for it, go ahead and plan for that expense in your budget. Saving for a large expense throughout the year can help reduce the burden of it. Ultimately, by creating a budget, you’ll become more aware of your cash flow for the year ahead.
- Evaluate & Optimize Your Investment Portfolio
While reflecting on your New Year’s Resolutions, try reflecting on your long-term goals as well. Oftentimes, your long-term goals can be related to your investment portfolio. To evaluate your investment portfolio to see if it aligns with your goals, review the areas below.
•The asset allocation or mix of investments in your portfolio. Depending on the objective of your portfolio will help you decide on the mix of investments you should own. Over time, your asset allocation can drift, leading to a different allocation than you had originally planned for. When this takes place, you can look to rebalance your portfolio back to the original asset mix so that it is realigned with your goals.
•The diversification of your investments. By diversifying your investments, you’re spreading out the risk while attempting to optimize returns. This can be done by investing in different asset classes, investment vehicles, and locations of your investment.
•Your contribution percentage. When reviewing your contribution rate, look to see if you’re contributing enough to be on track to reach your goals. If not, then you may need to increase your contribution rate to put you back on track to meet your goals.
- Review & Update Your Estate Plans
I know you probably don’t want to start the year talking about death. However, reviewing your estate plans at the first of the year can provide you with peace knowing that you have a plan for yourself and your loved ones when the time comes. An important area to monitor with your estate plans is the beneficiaries you listed on items like life insurance and retirement accounts. If you’ve experienced a major life change such as children, marriage, or divorce then it may be a sign to review and update your beneficiaries.
If you have not developed a plan for your estate, the first of the year can serve as a great time to have a conversation with your loved ones and begin developing an estate plan. Oftentimes, the hardest part of developing an estate plan can be that first conversation.
- Analyze Your Insurance Policies
One of the biggest threats to your financial success is the risk of financial loss due to the unexpected. Whether it’s a car accident, medical emergency, or the death of a loved one, the risk of the unexpected can be detrimental to your plans. To help hedge this risk, there are different types of insurance such as life, disability, health, home, and auto to protect you and your family.
When reviewing your insurance policies, look to make sure you have the proper amount of coverage. As time goes on you may need additional or less coverage from the previous year. Whatever the case may be for you, it’s important that you’re carrying the proper amount of coverage to help insure the risks in your life.
- Invest In Yourself
The best investment you can make is one in yourself. Its return can be hard to quantify but it can pay huge dividends in the long run. An investment in yourself can come in several different ways. It could be furthering your education, buying back your time, or joining a like-minded community. Ultimately, an investment in yourself provides you with an opportunity to continually progress in your journey of life.
Whether it’s creating your budget, reviewing your investments, or sharpening your skills, I hope you can find some way to incorporate personal finances into your New Year’s Resolutions. From the team at Life Compass Financial, we would like to wish you a great year ahead!
-by Jacob Young, AAMS®
Financial Advisor, RJFS
313 East 10th Avenue
Bowling Green, KY 42101
Phone: 270-846-2656
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability.
Ben Smith Life Compass Financial is not a registered broker/dealer and is independent of Raymond James Financial Services, Inc. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.
