In a few short weeks, a new year will be upon us.
Every January provides an opportunity to turn a new leaf and enjoy a fresh start. Regardless of how 2016 went for you financially, 2017 presents a lot of opportunity to improve different areas of your life, especially as we consider making New Years resolutions. One of the most common areas to set such resolutions is our financial life. In fact, Statistic Brain reports that the third most-common resolution is to save more and spend less.
Successfully meeting that one simple resolution requires you to take action in many different areas. As you consider your financial house for 2017, consider the following.
Look Over Your Investments
Reviewing your investment portfolio is a key part of making sure you’re on track to reach your savings and retirement goals. Even if you use a buy and hold strategy, it’s best to review your investments at the end of the year, or the beginning of the new year to make sure you’re allocated as you want. “It’s good practice to review the investments you have within the plan and rebalance your 401(k) on an annual basis, so your investments continue to work most effectively for you,” says Carl Gagnon, director of global retirement programs at Colonial Life. If you have outside retirement accounts, you should take those into consideration as well as they make up the complete picture of your retirement planning.
What should you do if you don’t feel comfortable analyzing or rebalancing your portfolio? Have no fear as employers often have your back. Many times your 401(k) plan will offer free resources that can help you through the entire process, so it makes sense to take advantage of them. Gagnon adds a helpful tip if you want to save more, “get a head start by increasing your 401(k) deferral rate. An increase of just one percent can make a significant difference over time. Remember, for 2017 you can defer up to $18,000 a year in your 401(k) plan. So be ready to adjust your 2017 contribution rate to improve your chances to reach this goal.”
Life Insurance Coverage
Life insurance is something we often overlook by thinking we can get to it later. You may even think you don’t need life insurance because you’re young or single. In many instances, that’s simply not the case. “Life insurance is a key component of a solid financial plan,” says Pam Jenkins, director of life products for Colonial Life.
You may not realize it, but life insurance plays a significant role in the retirement planning discussed earlier. With that being the case, the beginning of the year is a great time to think over any changes in your needs or identify any gaps in coverage. If you don’t have coverage or need to start with something relatively inexpensive, term life insurance is typically your best option. “…a term life insurance policy can offer a high benefit at an affordable cost, helping to give your family the support they would need to continue mortgage payments and college costs if you die unexpectedly. Permanent life insurance is another option, giving you longer-term coverage with the ability to build cash value,” adds Jenkins.
If you don’t have coverage, look into a group policy through your employer and supplement that with coverage you purchase to ensure you’re covered if you leave for another job. Whole life insurance is permanent life insurance with the benefits of cash value accumulation that provides coverage through any job changes and into retirement and may be available through your employer.
Review Your Budget
The key to saving more and spending less in 2017 comes down to one thing – your budget. Regardless of the budgeting method you use, it’s important to take stock of where you stand before the new year begins.
Review your spending and saving accomplishments over the past year. Use those findings to adjust, as necessary, your budget to optimize it for the coming year. Think of this as charting your course for 2017 and using your budget to help you hit each mile marker.
Don’t Overlook Qualifying Events
You likely just finished going through open enrollment season. During that time you hopefully determined the best benefits options for your needs. You may think that was your one opportunity and have to wait another year to make any changes. In some situations, that may not be the case, which is referred to as a qualifying event.
A qualifying event allows you to make changes to benefits options mid-year. Following are some of the cases where you may be able to take advantage of a qualifying event:
- Having a child, whether your own or through adoption
- Losing a job
- An error occurred during open enrollment
- A loss in coverage
Keep in mind you will likely need to show proof of the event, but it may provide an opportunity to take advantage of more cost-effective benefits.
There are many things to keep in mind to start out the New Year on good financial footing. With a little work, you can set yourself up for success for the entire year.