Include Financial Goals in Your New Year’s Resolutions

by | Feb 3, 2022 | Financial Planning

Each new year provides an opportunity to make positive changes in our lives. Your finances should be no exception. While you’re setting your New Year’s resolutions, take the time to review your current financial position and ways that you can improve your finances.

Start the year off strong by taking a critical look at your finances. During this process, determine ways that you can secure your financial future by maximizing your returns and minimizing unnecessary risk. Here are 7 simple things you can do in early 2022 to set yourself up for financial success this year and in the long run.

1. Update your Financial Goals

A successful financial plan has clearly defined goals and steps for reaching them. This year, review your financial goals and make sure that all of the things you need your money to accomplish over your lifetime are clearly defined and written down.

If you had any major life changes last year such as adding a new child or grandchild to your family, buying or selling a home, starting a new job, or retiring from an old one, make sure that your financial goals reflect these changes. Even if you didn’t experience major change, review your goals and make sure that they still match your vision for the future. After all, times change, the economy changes, and your life changes. Your plan should always reflect your changing situation.

With your financial goals in mind, the next important step is to contact a financial advisor. An experienced financial advisor, like those here at Brookstone Wealth Management, can help you review and develop your goals, while creating a plan for reaching them.

2. Rebalance Your Investment Accounts

Picking the perfect mix for your risk tolerance and investing goals can be a challenge, even with an experienced financial advisor. But the work doesn’t stop there. To maintain an optimized portfolio, you need to maintain your appropriate mix of investments. However, the issue with maintaining the appropriate mix, is that your investments do not grow at the same pace.

Over time, your investment mix will become distorted as one stock or sector outperforms or underperforms the other assets in your portfolio. This will eventually lead your investment mix to stray from your target investment lineup or require constant rebalancing. That’s why an experienced financial advisor is critical. An experienced advisor can monitor your investment mix throughout the year and adjustment as necessary.

Even if your assets are still in line with your targeted investment mix, your financial plan could be stale. Your asset allocation should change with time and with your priorities. This means, the allocation that was right for you a few years ago may not be appropriate today. If you are unsure about how your assets should be invested, an experienced financial advisor at Brookstone Wealth Management can take the stress out of this process.

3. Review Your Tax Plan

Taxes can reduce your income and investment gains, and a high tax burden could delay or prevent you from realizing your financial goals. However, with careful planning, you can minimize the impact of taxes on your finances this year and in the future.

There are many strategies for minimizing your tax burden that range from “tax loss harvesting,” to allocating a portion of your savings to tax-advantaged investments. A financial advisor can help you review the current state of your assets and estimate how taxes will impact your financial plan. An experienced advisor can also help you develop strategies for how to structure your investments and order your distributions to minimize the impact of taxes.

4. Increase Your Savings

You may have gotten a financial windfall or a holiday bonus in 2021. Consider allocating a portion of this to your savings. Adding these funds to savings won’t reduce your monthly income, so it may be a more comfortable way to build your nest egg.

To make sure that you stick to your savings goals, set up salary deferrals to your retirement accounts and monthly transfers to your savings or brokerage account. By automating your savings, you are more likely to meet your savings goals.

If you find that you still need to save more to reach your financial goals, consider ways to reduce your spending. After all, it’s no secret that bad spending habits can lead to less money for reaching your financial goals. On the other hand, properly managing your spending can help you free up money each month to invest. A trusted financial advisor can help review your budget to determine ways to cut spending and increase your savings.

5. Review Your Insurance Needs

Insurance often makes up a significant portion of a family’s budget. When you review your financial position, it is important to consider what would happen if you experienced an emergency. While insurance can come with a steep monthly cost, having adequate coverage can help protect your family from disastrous financial losses in the case of an emergency.

When reviewing your coverage, ensure that you have enough life insurance to care for your family in the case of your death. When your situation changes, be sure to update your life insurance.

Also, it’s important to check on your disability policy. Each year, about 5% of workers experience short-term disability. Additionally, one fourth of people experience long-term disability during their working years. Disability insurance is typically inexpensive but can provide much needed income if you experience an injury or illness that prevents you from working.

Finally, review your health insurance to make sure that you have the appropriate amount of coverage for your family’s needs. Choose a health care plan that minimizes your monthly costs while providing an adequate amount of coverage in case of an emergency. If your situation permits, consider the benefits of investing through a Health Savings Account [HSA].

Selecting the optimal level of insurance for your family can be a daunting and confusing task. That’s why you should seek the advice of an experienced financial professional. The right advisor can help you ensure your family is protected without overspending each month.

6. Review Your Estate Plan

While the process can be uncomfortable, creating and maintaining an estate plan is essential to your family’s financial health. If you don’t have a will, make it a priority to have one written. If you have a will, review it to ensure that your assets will be split according to your wishes in the event of your death.

In addition to maintaining a will, you should ensure that your retirement and investment accounts have beneficiaries listed. This simple task can make it much easier for your beneficiaries to access your accounts after your death.

Further, keep a record of all of your accounts, their locations, and the assigned advisor. Make sure that your beneficiaries know how to access this list. Keeping these records will ensure that your beneficiaries will know who to contact at the time of your death.

Finally, consider the tax implications of inheritance. If you are concerned that your beneficiaries may have to pay estate taxes, contact a financial professional to review your options.

7. Contact a Financial Advisor to Update Your Financial Plan

An experienced financial advisor can help you set goals and create a plan for achieving them. If you need help planning and forecasting your retirement years and the steps you can take to meet your goals, contact an advisor at Brookstone Wealth Management.

At Brookstone, we will develop your Financial Fingerprint™ – a custom wealth management plan that is quick to assemble, easy to understand, and simple to modify as your circumstances change. With your Financial Fingerprint™ and a trusted financial partner, you will have the tools to stay on the path toward your True North.

Contact the team at Brookstone Wealth Management to get started today.