12 Financial Resolutions for 2012

Dec. 12, 2011 - PRLog -- The New Year is fast approaching and it is time to focus on our new year’s resolutions.  Many of us will vow yet again to exercise more and lose weight.  Try something new! Look critically at your overall financial picture. Are you on track to meet your short-term and long-term goals? Here are 12 financial resolutions for the New Year, written and rank-ordered by the Board of Directors of the Financial Planning Association of Massachusetts.

1.   Get on top of your expenses. Use widely available online tools at Mint.com or Yahoo Finance to record and track your expenses. Divide them into “must have” and “nice to have” categories.  If an item falls in the “nice to have” category, stop and think before you purchase.

2.   Mind your debt. Since 2008, Americans have reduced their debt and increased their savings. Be sure you are one of them! Pay off credit cards starting with those with the highest interest rates.  Once you have paid off all of your debts, continue those payments into your savings account.  

3.   Don't put off retirement planning. Do you have a blind spot when it comes to saving for your retirement? The reality is that you may need to finance 30 years of retirement living. Overcome denial and face the facts - everyone over 50 needs a written retirement plan. Don’t leave it to chance.  

4.   Verify that you are invested correctly. Some people have too much stock, and others not enough. Make sure your portfolio takes into account the size of your nest egg, your tolerance for risk and when you will need the money. Get a second opinion from an investment professional or financial planner. At Morningstar.com, take a course on investing, set up a mock portfolio, or join in open discussions with others.

5.    Protect your dependents. If you’re not around, how will your survivors be cared for? Review your existing life insurance policies to ensure they are still working properly for you.

6.   Secure Your Identity. The cyber-thieves get smarter every year so take steps to reduce the odds of becoming a victim of identity theft.  Practical advice can be found at www.ftc.gov, courtesy of the Federal Trade Commission.  

7.   Manage taxes. Tax planning should be more than one annual trip to your tax preparer. Take time to learn about the ins and outs of pre-tax vs. post-tax saving; tax loss harvesting, and Roth conversions, for example. You may be leaving money on the table.

8.   Protect your assets. Check your disability coverage, as well as your homeowners, auto insurance and liability insurance. Request an insurance review of all of your policies. You may be able to save money and increase your coverage if you consolidate your policies with one carrier. Homeowners should obtain a Massachusetts Homestead Exemption to protect a significant portion of equity in their principal residence from potential creditors.

9.   Update Your Important Documents.  You should update your will at least every five years or when a major life event occurs. Make sure all of your retirement accounts name the correct beneficiary.  Many investment companies and banks have been bought out or merged over the last several years.  Often, this information is not transferred to your new custodian.

10.   Evaluate your housing situation.  Consider housing costs and options. Are you living in the right place? If your housing costs are north of 40% of your income, you may be in over your head. Or, if you have “aged in place,” maybe it’s time to downsize.

11.   Plan for long term care.  Anticipate long term illness. Buy long term care insurance for yourself and your parents.  Many large estates are decimated by very expensive nursing home and home care bills.  

12.   Get the right advice. A financial planner can help give clarity to your situation, plan your retirement, set goals, and work with your attorney, tax advisor, and insurance professional to help you make the most of your money.

To find a financial planner near you, go to the Financial Planning Association at fpanet.org/plannersearch  
To learn more about the Financial Planning Association of Massachusetts, visit fpama.org.

About the Financial Planning Association of Massachusetts
Since the year 2000, the FPA™ MA has sought to foster the value of financial planning and advance the financial planning profession in the Bay State. Our 900 members are dedicated to the financial planning process, which entails establishing personal and financial goals and creating a way to reach them. FPA™MA believes that everyone needs objective advice to make smart financial decisions and that when seeking the advice of a financial planner, the planner should be a CFP® certificant.
Many FPA™ MA members engage in philanthropic pro bono work in their communities. They also recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies. We welcome all those who advance the financial planning process and promote the CFP® mark as the cornerstone of the financial planning profession.

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