Once the ball drops and the champagne bottles are in the recycling bin it's time to tackle your resolutions.
By having a financial plan, you’ve already shown a commitment to working toward the goals that are most important to you. Hopefully in 2018 you achieved some of them, and are closer to reaching others as we move into 2019.
But plans can change, and the new year is a great time to review yours to make sure you’re enjoying what you want today while still making progress on goals you have for the future. Here are the steps to take to make sure your financial plan still reflects your dreams and priorities.
1. REVIEW YOUR GOALS
A lot happens over a year. Maybe you got a new job (with a nice raise). Maybe you paid off a debt that frees up money in your budget. The changes in your life impact your financial plan. This is a good time to update your plan to account for the changes that may have happened in 2018.
While you’re at it, maybe it’s time to reprioritize and dream again. Is that new kitchen still at the top of your list? Maybe the kids are getting older and that dream trip to Disney World is now the first priority. Also, are there new things that you're interested in achieving? Make a list of what’s still important to you, what isn’t, and the new stuff that should be making it to your goals list.
2. UPDATE YOUR BUDGET AND PLAN
Shift your budget and plan to match your priorities. If you paid off some debt, you may now want to put that money toward the Disney World trip, or perhaps you've been wanting to put some extra toward retirement (the contribution limits on retirement accounts are going up in 2019). If you’ve decided you can wait a few more years to upgrade your car, you might shift some of the money you were saving for those new wheels to something else. The key is to make sure you’re budgeting for all the things you want while also setting aside enough to meet your future goals.
3. REVISIT YOUR INVESTMENTS
Most years, your investment mix shouldn’t change drastically. But as you get older and as your goals change, you may want to make tweaks to accommodate those shifts. For instance, if you’re getting closer to retirement, you may want to update your investment mix so that you own a smaller percentage of stocks, which offer growth over the long-term but can be volatile on a day-to-day basis. Your financial advisor can help you review whether you still have the proper mix. Also, make sure you’re rebalancing your portfolio over time.
4. REVIEW YOUR INSURANCE NEEDS
To protect your financial plan, you need some reassurance that you can weather the unexpected. If you took money out of your emergency fund in 2018, make sure you have a plan to rebuild those savings. Did you get a raise? Then it may be time to review your life or disability insurance.
While you’re reviewing your insurance coverage, this might be a good time to consider converting term insurance to a permanent policy. As you get older, you may find that the benefits of permanent life insurance are more appealing.
5. ENJOY 2019
A strong financial plan shows you how you’ll achieve all the things you want in the future, but it also frees you to enjoy your money today. So make this the year that you cross another goal or two off the list, knowing that you’re making progress toward all the others. When you know you’re saving for the future and are prepared for the unexpected, you have the peace of mind to enjoy the money you set aside for today.