Your 2017 New Year’s Resolutions Should Involve Your Money, Too
By Jayne Di Vincenzo, AIF ®, President, Lions Bridge Financial Advisors
More American adults – as many as four out of 10 of us – make New Year’s resolutions that involve their finances. That’s good, but I wish we all did this because this type of planning leads to better financial health as well as confidence in making sound decisions. Financial health can be tough to accomplish alone- just like sticking to your fitness goals can be. A study commissioned by the Consumer Protection Bureau and the Urban Institute found that “many consumers may need someone to help them identify and achieve their goals and take action on financial plans. A financial coach can serve as a capable and trusted guide to help consumers navigate those decisions.”
With 2017 kicking off, this is a great time of year to be thinking about smart, yet simple steps we can seek to take to improve our financial well-being.
Here are five things I would recommend:
Review. While you’re preparing for tax time this is the perfect opportunity to examine everything that involves your finances: credit reports, savings and checking accounts, retirement funds and whatever other financial and income generating assets you own. This will allow you to spot spending trends, savings habits and investment strategies that you may want to change.
Reassess. Perhaps reviewing your assets will reassure you that you’re doing everything right. If it doesn’t, make the changes you need to make and give yourself deadlines. Examples may be too much money in a savings account paying next to nothing in interest. If you have excess cash, it may make sense to move it. Are investments in your retirement plan doing poorly? Talk with your employer’s plan provider or check out their web site about other asset mixes that may be more appropriate. Too much spending on vacations or restaurant meals? Talk with your spouse or make an executive decision. But you also may feel like you need professional help. If so, talk with friends who get professional help. Compile a list of names and schedule get-acquainted meetings to see if you can find the right financial coach.
Save. More than half of the folks who make financial resolutions vow to save more, and that’s a good thing. However, an alarmingly low percentage of American adults – somewhere between 25 percent and 30 percent*-- have an emergency fund sufficient for six months of expenses. Beyond that, only about 30 percent* of Americans are saving enough for retirement. More Americans are saving than before the recession but not enough are doing so. Are you?
Repay debt. This is another popular financial resolution, but, again, it’s not popular enough. Studies show only about 25 percent* of those who make financial resolutions vow to pay off debt. With mortgage rates at historic lows and zero-percent car loans commonly offered, it’s true there is cheap money out there, but that doesn’t mean it’s a good idea to ignore debt just because interest rates are low. Many are surprised to discover the interest on their credit cards or student loans are much higher than mortgage or average car loan rates. Pay attention to what you’re paying on all debts. Repaying costly debt first is a smart move.
Protect yourself. This is a dangerous world we’re in. Identity thieves have all of the tools they need to steal your money –and your good credit- from the comfort of their kitchen tables. Protect passwords by regularly changing them (bi-monthly on the same date works for some) and make them difficult to guess. It is amazing that in 2016 the three most popular passwords are still 123456, ‘password’ and 12345678! Monitor your credit by checking in with the three major credit reporting agencies using tools like Credit Karma and freeze your and/or your underage children’s credit to protect them from identity theft.
There are many other tips I could have mentioned, but these are five good ones. The point is to do something for your financial health while you’re making your New Year’s resolutions for 2017.
* The Fidelity Investments® 2016 New Year Financial Resolutions Study
Jayne Di Vincenzo serves families and businesses throughout Hampton Roads and in 25 states. Securities & advisory services offered through LPL Financial, A Registered Investment Advisor (RIA). Member FINRA/SIPC. Jayne@LionsBridgeFinancial.com 757-599-9111.