You may be among the 46% of adults who said they were considering financial resolutions for 2013 in a recent survey. According to surveys conducted by the Employee Benefit Research Institute and Fidelity Investments, getting their financial house in order is on the minds of a lot of Americans.
Among the top resolutions for survey respondents were:
Save more money 52%,
Spend less money 19%,
Pay off/down debt 19%,
Develop a plan for long-term financial goals 9%,
Make a household budget and stick to it 9%,
Pay down/eliminate credit card debt 9%.
The same respondents answered some questions about their current financial situation. Of all respondents, 67% said they were a little, or a lot behind schedule in planning and saving for retirement. 22% said they were on track, and only 9% indicated that they were a little or a lot ahead of schedule. 2% of respondents refused to answer the question or didn’t know.
So what resolutions should you consider to get your finances back in shape for 2013?
Resolve to track how much you are spending for a few months. It is impossible to determine how much you will need to save for retirement without tracking what you are spending today.
Create a plan for paying off your debt. Start with the highest interest rate balances first and systematically rid yourself of debt. While many of our clients’ investment portfolios experienced double digit growth from the investment markets in 2012, that pales in comparison to credit card interest rates that can be 20%+. Paying down that debt will be like earning that high interest rate credit card return and allow you to begin saving for other goals.
Resolve to get your estate plan in order. You don’t need to spend thousands of dollars with an estate planning attorney creating trusts to put an effective estate plan in place. Make sure you have the beneficiaries of your retirement accounts and life insurance policies updated. Make sure you have basic estate planning documents in place like a will, power of attorney, and a living will or healthcare proxy.
Resolve to use insurance to shore up your risks. Do you have adequate life insurance in place to help your family achieve all of their financial goals if something were to happen to you or your spouse? The cost of life insurance has come way down in recent years, and additional coverage may be cheaper than you imagined. What about long-term care insurance? According to the Depart of Health and Human Services, 70% of people over age 65 will eventually need some type of long-term care services. New hybrid life insurance policies with long-term care riders can make shopping for both types of coverage both easy and affordable.
Resolve to ensure that you are receiving all the employment benefits available to you. This includes participating in your employer’s Health Savings Account (HSA) or Flexible Spending Account (FSA). If your employer offers a 401(k) plan, make sure that you contribute at least enough to get the employer-match, although a 10% of pay goal is much better. If you have insurance shortfalls identified in item 4 above, look to employer-provided insurance benefits to shore up shortfalls.
Need help with forming and keeping your financial resolutions? Give our office a call and we will be happy to help you get the ball rolling.
Sources: Wall Street Journal, Employee Benefit Research Institute, and Fidelity Investments