It has been said that those who made financial resolutions at the beginning of 2015 are more likely to be more optimistic and feel more financially secure as we begin 2016. Just making a plan and resolving to improve financial well-being seems to have big benefits, if only for your mental health.
Typical financial resolutions include the goals to save more, spend less and pay down debt. Economic concerns, market volatility and seeking greater financial security all contributed to good intentions. The top worries are usually unexpected expenses, the economy and increased health care costs, particularly in retirement. Global instability, market volatility and interest rate change are just some of the worries related to the economy.
A good way to start the year on the right track financially is to make sure that you have a financial plan in place. January of each year is a good time to set new financial goals and reprioritize your current ones. Take a look back at the financial goals you set for yourself last year–both short- and long-term. Have there been any changes that would suggest changes to your goals, to make them more realistic, attainable and/or appropriate.
You’ll also want to review your investment portfolio to ensure it is still on target to help you achieve your financial goals for the upcoming year. To determine whether your investments are suitable for reaching your financial goals, you’ll want to ask the following:
- Do you still have the same time horizon for investing as you did last year?
- Has your tolerance for risk changed?
- Do you have an increased need for liquidity?
- Does any investment now represent too large (or too small) a part of your portfolio?
Successful investment is about managing risk versus return and having a well thought out portfolio strategy specifically based on your circumstances, needs and objectives.
Having good credit is an important part of any sound financial plan, and the new year is as good a time as any to check on your credit history. Your credit report contains information about your past and present credit transactions and is used by potential lenders to evaluate your creditworthiness. A positive credit history is important since it allows you to obtain credit when you need it and at a lower interest rate. Good credit is even sometimes viewed by employers as a prerequisite for employment. Managing your debt is often an area to be focused on, either to pay it down or ensure that it is effective use of credit.
January is a time when many people reflect on the previous 12 months and look ahead to what they can improve over the coming year and beyond. Be cautious about setting too many or unrealistic financial goals. Otherwise, you may be unable to accomplish any of them. Take this opportunity to restate your financial resolutions simply and clearly for the New Year. It may be a good idea to maintain a checklist to keep track of how you are doing throughout the year, so that you can make any necessary modifications. Consider meeting with your financial advisor to review the goals and objectives that you have established.
