9 Financial Goals to Make for the New Year

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1. Save as much as you can in your retirement accounts.

If you are like most people, you want to retire. Hopefully, before you die. That is entirely possible, but for retirement to work, you must recognize how it works. To achieve the lifestyle you desire in retirement, you must save the money ahead of time so it is waiting for you when you arrive.

In years past, your retirement was based on the number of years you worked. This is when people had pensions. After a certain number of years, you would receive a specific amount of dollars annually for the remainder of your life. Because only about 20 percent of the working population still have access to pensions, retirement savings are primarily your responsibility. That doesn’t have to be scary; it just means you need to be prepared.

If you are working, you can save money in retirement accounts, such as a 401(k), 403(b), or IRA. These accounts allow you to save money today that can grow and be available to you when you retire. The dollar you save today in these accounts has the potential to grow into multiple dollars by the time you retire. If you are not saving, then get started. If you are, then check how much you are saving and see if you can save a little more. It may take a minor sacrifice today, but your retired self will thank you for the choices you make today.

2. Make sure you are properly diversified.

Whether you are saving for retirement or investing outside of your retirement account, it is essential to ensure that your investment strategy aligns with your goals. To determine if you are properly invested, ask yourself three simple questions.

• What is my goal?
• How long do I have to achieve it?
• What is my risk tolerance?

Once you answer these questions, you can then determine if your investments are properly diversified to meet your goals. If you are doing the first part and saving, then you want your investments to do the heavy lifting in helping you achieve your goals.

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3. Check your tax strategy.

Did you receive a big tax refund last year? Some people get excited about this, but should you? Getting a big refund means you paid more in taxes during the year than you needed to. You gave Uncle Sam the right to use your money interest-free for the entire year. If you are getting a significant tax return, then consider adjusting your tax strategy because it might be better for you to have access to that money throughout the year instead of waiting for a tax refund.

4. Pay down credit card debt.

Most people understand the drain that credit card debt can have on their finances. However, there is also an emotional drain that comes with having credit card debt. The first step is to understand how you got into debt and then identify the necessary adjustments to prevent it from happening again. I don’t want you to beat yourself up, but learn from it. Once you recognize the opportunities that exist on the other side of credit card debt, it could be a real motivator to help you get rid of it once and for all.

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5. Build an emergency savings fund.

In life, emergencies will happen. The car will break down, someone may get sick, the roof might leak, or your best friend will announce they are having a destination wedding in Aruba, and they want you to be the best man or maid of honor. Whether good or bad, they are all emergencies.

Emergencies are unexpected, urgent, and necessary. That’s why it makes sense to have money set aside to cover these things. Not having those funds available is one reason people go into debt, because they have no other way to pay for the emergency.

6. Automate your savings process.

One of the best ways to achieve financial goals is to automate them. If you are saving in your retirement plan at work, these plans are set up so that the money is deposited into the account first, and you receive payment after that. This works because, if you had to pay your bills first and then contribute to your retirement account, for most people, it would never be feasible. The fact that this happens in the background is the magic of these accounts. All you have to do is set it up, and everything happens with minimal effort on your part. If you continue this approach for a long time, you will be amazed at how your accounts can grow. Making it automatic is not just a good idea for your retirement savings, but also for your emergency savings and many other types of savings or investing you may be doing.

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7. Make sure you are properly insured.

Insurance is the one thing we buy that we hope we never have to use. For example, you purchase auto insurance, but using it means you either got into an accident or damaged your vehicle. However, knowing you have insurance gives you peace of mind if something happens. For this reason, consider these four types of insurance.

• Life insurance - Is there someone who will suffer a financial loss if you are no longer here? If the answer is yes, then chances are you need life insurance. Remember, life insurance is not for you but for those you leave behind. If you think you don’t need life insurance, you might be right. However, it’s your wife, children, and heirs that need it. The policy may be on your life, but it is not for your life; it’s for theirs.
• Disability Insurance - What happens to your income if you get injured or sick and cannot work for an extended period? This is what disability insurance covers. According to the Social Security Administration, roughly 1 in 4 workers who reach age 20 will become disabled before they reach retirement age. Whether short-term or long-term, there is a high probability you may face this during your working career. The good news is that many companies offer this type of insurance as part of their benefits package, so consider it when it is time for annual enrollment.
• Long-Term Care Insurance - There may come a time in your life when you need help with what are called the Activities of Daily Living (ADLs). These are eating, dressing, bathing, transferring, continence, and toileting. If you reach a stage in life where you need ongoing help with at least two of these, you are now in a long-term care situation. This type of care is not covered by health insurance or Medicare, and the care can be costly. Consider this type of insurance now, because the longer you wait, the more expensive it will be.
• Umbrella Insurance - Maybe you haven’t noticed, but people in our culture love to sue. Umbrella insurance is a great way to protect your assets in the event of a claim. For example, someone could slip and fall on your property. If they sue, your umbrella policy can cover the costs and prevent them from seizing your property.

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8. Get your estate planning in order.

We all know that one day we will face death. What happens to your stuff when you are no longer here? Estate planning is about identifying your wishes and creating a plan of action that carries out those wishes upon your passing. This is one of the most loving acts you can do because without it, you can leave behind chaos. It won’t matter to you because you won’t be here, but it will be a colossal mess and headache for those who are. Make a plan to get your estate planning in order this year.

9. Meet with a financial advisor.

As you can see, there is a lot to consider, and I haven’t even mentioned everything. Most people don’t have the capacity to focus on all these things. That’s why I encourage you to meet with a financial advisor at the very least to help you come up with a plan to achieve your goals and objectives. Whether you choose to hire them for the long term is your decision, but at least let them either verify you are on the right track or give you some recommendations that can put you on the right track.

When considering a financial advisor, ensure you choose one that is fee-based and a fiduciary. Fee-based means you are paying a fee for the service they provide, not a commission for the products they recommend. Fiduciary means they have an obligation to give you advice that is in your best interest. Chances are, you may not be very knowledgeable in these areas, so why not consult with the experts?

As you approach this new year and your financial goals, I hope you see that you have some work to do. However, with proper planning and the right help, you can get on the road to achieving all your financial goals and dreams. My former boss and mentor said this. The number one reason people fail financially is procrastination. In this new year, don’t let that be you.

A little sleep, a little slumber,
a little folding of the hands to rest—
and poverty will come on you like a thief
and scarcity like an armed man. - Proverbs 6:10-11

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