We all look forward to the New Year for different reasons. Maybe you are looking forward to a fresh start, or you have something exciting planned like a vacation, wedding, etc. No matter the reason, the New Year is a time of reflection and resolution. Of course, the most common resolutions revolve around exercise and weight loss, and while setting yourself on a path to a healthier lifestyle is admirable, you may want to make resolutions to keep your bank account and credit healthy as well. Here are a few ideas:
- Create a personal finance statement. A great way to get a snapshot of your finances is by periodically preparing a personal financial statement. This allows you to compare your personal finances as they fluctuate by year, month, or quarter.
- Prioritize your debts. Paying down debt is a perennial favorite resolution, but which debts should you pay first? Prioritize your debts by considering both the highest amount and the highest interest rate. Allocate the most each month to accounts where you are paying the most interest. Over time, this will minimize the total amount of interest you pay.
- Start or ramp up your retirement plan. It’s never too early to start planning for retirement, but it can be too late. When considering your options, look for investments that provide a future tax break like a Roth IRA or for an investment that offers pre-tax payroll deduction or an employer match, like a 401K. Try to invest any pay raises directly into your retirement to accelerate the growth of your savings, especially if you got a late start.
- Consider estate planning alternatives, additions. Estate planning is synonymous with “drafting a will” for many people. However, there are actually a wide range of estate planning options available based on your goals. For example, documents such as healthcare directives and powers of attorney are resources to ensure your wishes are followed in the event you are incapacitated. Additionally, instruments like trusts enable you to distribute property without requiring probate and provide valuable tax protection for your loved ones after your death.
- When in doubt, get professional legal assistance. Although you may think you can handle your legal matter on your own, research supports that hiring an attorney to represent you and protect your interests usually results in a better outcome.