
7 Financial New Year’s Resolutions to Start Your Year Right
Each new year provides an opportunity to make positive changes in your life, and your finances should be no exception. Start the year off strong by taking a critical look at your financial position. During this process, ask yourself if your money is working for you without subjecting you to unnecessary risk.
Once you understand your financial health, you can incorporate financial goals into your New Year Resolutions. Consider adding the following 7 simple tasks. You can complete them early in 2025 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. However, these goals can become outdated as your life progresses.
Take stock of 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. Then, update your financial goals to reflect these shifts.
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 reflect these changes and your current situation.
2. Rebalance Your Investment Accounts
Choosing wise investments is a difficult task, but the work doesn’t stop there. You also need to maintain your appropriate mix of investments by periodically rebalancing your account.
The challenge in maintaining your ideal investment mix is that your investments do not grow at the same pace. Your investment allocation 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. Fortunately, an experienced financial advisor can take the work of rebalancing most investment accounts off your plate.
When reviewing your investments, you may find that your assets are still in line with your targeted investment mix. However, your financial plan could still be stale. Your asset allocation should change with time and your priorities – meaning that 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 can take the stress out of this process.
3. Review Your Tax Plan
Taxes reduce your income and investment gains. A high tax burden could also 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 estimate how taxes will impact your financial plan as well as 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 2024. 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 comfortable way to build your nest egg.
You can also 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 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
When you review your financial position, it is important to prepare for emergencies with appropriate insurance coverage. This protection can come with a steep monthly cost, but adequate coverage helps protect your family from disastrous financial losses in the case of an emergency.
As you review your coverage, ensure that you have enough life insurance to care for your family in the case of your death. If your situation has changed since you purchased a policy, be sure to update your coverage.
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].
You may have a hard time selecting the right insurance for your family. 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 passing.
Further, keep a record of all your accounts, their locations, and the assigned advisor. Make sure that your beneficiaries know how to access this list. 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 owe 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 brings together the most important pieces of your financial picture into one easy-to-understand plan. 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.