Happy New Year! January 1 is a fresh start and for many of us, that means making some resolutions to take charge of our finances. Have you decided that this will be the year you will get your financial house in order? If so, you will want to address four key components to get your money matters on a firm foundation this year:
- Is your will up to date?
- Do you have a power of attorney?
- Have you set up an emergency fund? Are you contributing to it regularly?
- Have you reviewed your insurance lately?
Review Your Will
If you don’t have a will or you haven’t reviewed the one you have recently, you need to address this matter. Circumstances change over time, and a will that made sense when your children were small (and needed a guardian) may no longer fit your needs. If you get married after writing your will, the document will be automatically revoked, so you will want to review it if your marital status has changed.
Power of Attorney
The time may come when you may not be able to make legal or financial decisions for yourself due to illness or an injury. Having a signed power of attorney in place means you can appoint a trusted friend or family member to look after this function for you. Give some thought to who you would trust with your personal affairs and sit down with the person you have chosen and your financial advisor to discuss your wishes if you become incapacitated.
Part of your plan to get your financial house in order should include setting up an emergency fund. Ideally, you will want to have between six and 12 months of living expenses saved. Put aside some money in a separate account and decide that it will only be used for emergencies. Keep adding to it on a regular basis and watch your emergency fund grow.
Look at Your Insurance Coverage
Life insurance coverage is not meant to be a one-size-fits-all purchase. Your needs are unique to your families personal financial situation and these needs will change over time. For example, the amount of coverage you may require when you have a young family and a high debt load will be different than what you may need later in life when you have more assets, less debt and no dependents.
Also review your short and long term disability coverage to ensure its adequate should you have to take an unexpected leave of absence from work. Your financial advisor can help determining what amount of insurance protection is right for you and your family.
Do you have questions about getting your financial house in order for 2013? As an experienced financial advisor, I can review your plan and offer suggestions for getting on the right track. Please contact me for a personal consultation.