Financial Resolutions for the New YearSubmitted by David Vaughan Investments, LLC on February 2nd, 2017
by Stephanie A. Ricketts, CFP ®
February 2, 2017
At this time every New Year while fueled by nostalgia of the holidays and sometimes armed with a year’s worth of regrets, many often compose a list of resolutions that are both personal and financial in nature. As anyone that has successfully lost weight or broken a bad habit will tell you, the key isn’t just about making the list, but sticking with it, looking forward and enacting positive change.
With that premise in mind, here are several personal financial and investing resolutions for you to consider in 2017. They don’t necessarily need to be put in place at the beginning of the year, but they are worthy goals to implement and work on at any time.
Resolution 1: Identify Financial Goals
What do you want? Do you want to retire at age 62? Do you want a second home in Florida? Do you want to leave a legacy for your children or charity? Ensure your goals and objectives are SMART: specific, measurable, achievable, relevant and time bound. “I want to own a second home in Florida someday” is a fine goal but too vague. “I want to save $30,000 more per year for the next five years to put towards a future home purchase” is much better– it’s clear and actionable.
Resolution 2: Assess your Situation Honestly and Holistically
Calculate your personal net worth annually. It doesn’t need to be complicated! Make a list of what you own and subtract from that what you owe or consider capturing your asset and debt figures electronically in the DVI portal. If your net worth declines during tough markets – don’t panic. Such declines are usually temporary. What’s important is to track progress from year to year to see a general upward trend over your peak earning years. And if retired, you’ll need a plan for a drawdown strategy to make your assets last as long as necessary.
Further, try to take an unbiased look at your experiences and be honest with yourself about your financial situation and how you got here. Make sure your financial habits correspond to the rest of your lifestyle aspirations.
Resolution 3: Stick to your Investment Policy Statement
The investment policy statement should be a consistent reminder of why your portfolio assets are invested the way they are: identifying investment goals (see Resolution 1), stock and bond allocations as well as the parameters for monitoring and changing as needed. By committing to the plan you’re less likely to let emotion take over and react to short term economic or market news that is often times a flash in the pan.
Resolution 4: Keep it Simple
Close unnecessary accounts and consolidate accounts to just a few providers (if possible). Consider going paperless so that there is less physical documents to organize or shred – sensitive documents such as tax returns or estate planning documents can easily be scanned and saved to your secure vault in the DVI client portal. Simplicity applies to your portfolio as well – diversification is good but so is transparency and knowledge of what you own and how your portfolio is invested.
Resolution 5: Prepare for the Unexpected
Unfortunately no one is immune from life’s nasty surprises – don’t let your financial life be upended from these unexpected moments. If you don’t have enough assets to self-insure against major risks, review your insurance coverage and get it in shape. Consider storing inventories and important documents electronically (in the cloud). Lastly, maintain a cash emergency fund that would cover 6 to 9 months’ worth of your living expenses.
Resolution 6: Protect your Estate
Review your Will and / or Trust periodically to ensure your assets are still going to be directed as you wish. Coordinate asset titling and beneficiary designations with the rest of your estate plan. Have durable powers of attorney and health care in place and make sure a trusted friend or family member is aware of the location of these documents.
Resolution 7: Meet with your Advisor
Often times we need a partner or a motivator to help us achieve these goals and resolutions – a work out buddy, a coach or a mentor. At DVI we strongly advocate meeting with our clients at least once per year so that we can discuss all of the above and help our clients stay the course or effectuate change to bring their goals, dreams and objectives to fruition. We’re here to support and assist with whatever our client’s goals may be and feel fortunate to be a part of each client’s unique journey.
May your 2017 be happy, healthy, joyful and prosperous – however you may define it!