If you’re like most people, your financial life, like your professional and personal life, alternates between periods of stability and change. Some of these changes are anticipated, others may come as a surprise.
So, while you’re (hopefully) carrying out your New Year’s resolutions, consider adding a review of your finances to your list. Since this can encompass a wide range of tasks, here are three areas you might want to start with.
1. Adjust your insurance coverage, if necessary
If haven’t taken a close look at your insurance policy in a long time, you should, because you may find you need to increase some levels of coverage. Or you may find opportunities to lower premium costs. Things to look for:
- Do you have an umbrella policy to provide additional liability coverage beyond that provided by your home and auto insurance? If you have an umbrella policy, do you need to raise the coverage rate to reflect your growing net worth?
- Should you raise the “replacement value” of your homeowner’s insurance to reflect the true cost of rebuilding your home in the case of a fire or natural disaster?
- Do you need to increase supplemental insurance coverage to cover the replacement costs of valuable items (such as jewelry, antiques, or artwork) you’ve purchased over the years?
- Could you lower your auto insurance premiums by raising deductibles on older vehicles or taking advantage of low-mileage and good student discounts?
- If you bought a house or had a child, will you need to increase your life insurance coverage to pay for mortgage payments or future higher education costs in the event of your death?
- Is your term life insurance policy ending next year? If so, should you renew the policy, shop around for a new carrier, or end it entirely?
2. Review your financial account beneficiaries
If you don’t formally designate beneficiaries for your financial accounts, your spouse will generally be the primary beneficiary. But there are good reasons to legally assign these beneficiaries and review them every now and then:
- Designating your spouse as primary beneficiary and your children as contingent beneficiaries can help assure that your money will “stay in the family” and avoid the potential delays and costs of having these assets distributed through your estate.
- If you’re going through a divorce, you may want to remove your spouse as a primary beneficiary. However, you should consult with your divorce attorney before doing this, because states have different laws governing when and how such changes can be made.
- In some situations, you may want a trust to be set up a contingent beneficiary. This often occurs when parents don’t want minors to inherit their wealth with no strings attached.
3. Review your personal credit rating
If you owe money to a variety of creditors, use many credit cards, or are thinking about taking out another loan in 2019, you should conduct a preemptive credit review to head off any potential surprises.
- Order a free credit report from the three major credit reporting agencies, Equifax, Experian and Transunion. These reviews won’t necessarily provide your current credit score, but they will list all of your current creditors, which may enable you to detect possible fraudulent activity and identify theft.
- Prioritize your credit payments to reduce or eliminate balances with higher interest rates.
- Take advantage of credit cards offering with 0% interest rates on purchases.
Need help understanding–and keeping–these resolutions?
Consider meeting with your financial advisor or financial planning professional to discuss any of these financial resolutions and to determine if your investment strategy still aligns with your financial goals. It’s especially important to do this in situations where:
- Cash flows are dramatically reduced due to the loss of a job, divorce, or unanticipated out-of-pocket healthcare expenses.
- You have a new child and need to save for college.
- You’re approaching retirement and need help determining your retirement income needs and the best use of your retirement savings.
These financial resolutions may be time-consuming, but the payoff will be a clearer view of your financial picture, which may help you to grow and preserve your wealth with greater success and confidence.
This article has been provided for general informational purposes only and should not be interpreted as personalized financial advice. We recommend that you consult with a financial advisor or financial planner before you implement any major changes to your financial plan or investment accounts.
This article was written by Joelle Spear, a financial advisor located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. She offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. She can be reached at 508.598.1082 or at [email protected]
©2019 Canby Financial Advisors