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Financial Fitness Review for the New Year

Financial Fitness Review for the New Year

December 29, 2023

Financial Fitness Review for the New Year

Running counter to what seems like a constant drumbeat of negativity in the media, 2023 turned out to be a very strong year for investors.  Coming off the 2022 lows, stocks have rallied strongly, making back pretty much all the ground lost in 2022.  Bonds haven’t completely recovered from the last two dismal years, but these too have rallied in the second half of the year, as the market has begun to anticipate lower interest rates in 2024. 

With 2023 ending on a strong note, let’s turn our attention to the New Year.  The start of the year is a great time to deal with long neglected aspects of your financial life.  Here’s a few areas to think about as we head into 2024. 

Create or Update Your Financial plan.  If you have never created a financial plan, the start of the year is a great time to finally do so.  As wise men have oft stated – no one plans to fail, but many fail to plan!  A financial plan is every bit as important to your financial health as a visit to the doctor, good diet, and exercise are to your physical health.  Give me a call to discuss how a financial plan can help reduce uncertainty and provide a strong sense of direction as you work toward your financial goals. 

Already have a plan?  Great – but when was the last time you updated the details and sat down with your planner for a review?  We like to review plans at least annually – but it also makes sense to check in whenever there are significant changes happening in your life.  If you haven’t updated your plan in a while, reach out and schedule a planning review session, either online or in person. 

Review Your Insurance Needs.  This is one that no one likes!  Insurance is probably everyone’s least favorite topic to deal with.  And insurance salesmen…(ugh!).  Well, good news!  We can help you with an unbiased (really!) review of your insurance needs.  I don’t sell insurance…but as a CFP I have extensive knowledge of insurance products.  Consider all the various forms of insurance: 

Life:  Do your loved ones rely on your income for their financial security?  If so, having adequate life insurance is critical.  And the insurance provided in your employer benefits package is likely insufficient on its own.  For most people, inexpensive term life insurance will provide the greatest protection for the buck. 

Have policies you are not sure you need anymore?  You may have cash value locked up in policies which you no longer need, or maybe you are paying premiums for policies which have outlived their usefulness.  We can help you sort out your coverage options. 

Disability:  Same question – if your loved ones rely on your ability to earn a living, insuring against disability can be crucially important.  In this case, many employer plans do offer sufficient coverage – but not every employer offers it.  And benefits are sometimes meager enough that a supplemental policy is warranted.  I can look over your employer (or individual) coverage and determine your coverage needs. 

Long Term Care:  (oh here’s a topic we all love!).  Long term care is a huge financial cost for older people.  Since so many people eventually do need care, coverage can be very expensive – especially as people age or develop chronic health conditions.  Self insurance (paying your own way) may be feasible (the best of bad options) for some folks.  Others may find insurance options give them greater peace of mind.  In any case, everyone needs to have a long term care strategy as part of their overall plan.  If you don’t know what your strategy is, call and lets discuss! 

Home and Auto:  Costs for home and auto insurance have been soaring.  Having just completed a 3-hour drive back from my mother-in-law’s (in the dark, rain, and fog) I can understand why auto insurance is getting so expensive.  The number of aggressive drivers on the road just seems to increase every year!  As for home, insurers are facing higher costs from catastrophes and weather-related events – and of course, we the insured ultimately bear those costs.  But insurers are also notorious for taking advantage of their best customers – you know, the ones who keep paying premiums year after year, and never shop around.  Don’t let them take advantage of you.  And insurance review with an independent agent, or a little comparison shopping on the phone, might save you hundreds of dollars or more per year.  

Put Cash To Work.   With all the volatility of the last few years, and with money markets and CD’s once again paying competitive rates, many savers have accumulated substantial cash balances.  Higher interest rates are welcome, of course – but too much money in cash savings may leave you exposed to other than stock market losses.  Over the long run, money market and CD interest rates rarely keep pace with inflation.  Furthermore, the time when interest rates peak and start to decline (right now) has historically been a great time to invest in stocks and bonds (not so much for cash, which will likely see yields decline through the next year).  At these rates, cash deserves a place in an asset allocation – but that place is likely 5-10% not 50 or 60%!   I can help look over your accounts and make sure that your strategy is being properly implemented (or create a strategy as part of your financial plan if you don’t currently have one!) 

Get the Budget Under Control!   I am a huge believer in budgeting!  If you don’t really understand where all the money goes every month, you probably need to put some work into developing a budgeting or cash management system.  Believe it or not, having a budget can be very freeing.  Knowing that you are INTENTIONALLY spending your money instead of MINDLESSLY letting it slip through your fingers is incredibly empowering.  Need help getting your budget under control?  Give me a call, I’ll help you get started and point you in the right direction.  

So, here’s wishing all my readers all the best of life in what I hope will be a very prosperous and happy 2024 for you and your loved ones!