It’s a new year, which is a great time to leave the past in the past and refocus on the future. When it comes to money, there’s nothing we can do about what’s already been done. Too many investors get consumed by past mistakes, and forget to refocus on the here and now. The reality is, all you can do at this point is make the best decisions moving forward. With that said, here are 10 resolutions for 2017:
1.) Spend a little less, and save a little more. The more you save, the more you’ll have in the future. Look for two or three ways to cut down your current spending, and park that money instead into long-term savings. Putting money into 401(k) accounts, IRAs, or even into a mortgage can be ways to save for the future.
2.) Speaking of saving, double-check your emergency savings. A general rule of thumb is to keep 6 to 12 months of living expenses sitting in cash. You never know what can happen, so it’s smart to prepare.
3.) Re-evaluate your insurance coverage. Does it make sense given where you are at in life? You may be paying for insurance you don’t need, or you may find you don’t have nearly enough coverage to protect your loved ones in the event of something happening.
4.) Clarify your current financial goals. Some goals will be the same, but others may change. It never hurts to make sure your goals are specific and clear.
5.) Clarify your risk tolerance. With each passing year, it’s possible we are willing to take on less and less risk. Or your financial circumstances may have changed allowing you to take on more risk. If you haven’t re-examined your risk tolerance in quite some time, it might be worth double-checking where you stand there.
6.) Clarify your time horizon. Are you rapidly approaching retirement? Do you need money saved for a very specific purchase in the next year or two? It always helps to look at where you are at, and how far away from various financial goals you currently sit.
7.) Re-assess your current asset mix. Depending on your current financial goals, your own risk tolerance, and the time horizon for your objectives you may find that you are in-line, or out-of-line, in terms of your asset allocation.
8.) Get a plan together. Failing to plan is planning to fail, right? Whether financial planning, retirement planning, tax planning, or estate planning … it’s never too late to get started. 2017 may finally be the year you decide to get serious about planning. Your future self may look back and thank you.
9.) Get rid of bad debt. If you are carrying high interest debt, and still making minimum payments, it may be worth exploring options to try and pay off that bad debt at a much lower interest rate. Remember, the less you pay … the more you save.
10.) Look for ways to be generous. It can be as simple as donating some food to the local food bank, or buying a fresh package of socks and giving them out to the local homeless. I just believe something powerful happens when you help others, and I think it actually can help alleviate some financial stress. I’m certainly not advising you give all your money away, but I do think helping others can help you feel better about yourself.
Happy New Year everyone. Let’s make 2017 a successful one!