As we start a new year, it’s appropriate to think about resolutions. Many New Year’s resolutions involve health, so I want to discuss financial health, which directly relates to mental and physical health, due to the stress that personal finances can cause.
Here are four commonly overlooked financial topics that can be used as resolutions to improve your financial health:
- Earn the company match on your 401(k). If you are fortunate enough to work for a company with a 401(k), review your plan to see if there is a company match feature. If your budget allows for it, saving enough to receive your company match can increase your savings rate meaningfully. For example, a company may match you up to $5,000. So, if you contribute $5,000 to your 401(k) retirement account, your company will add another $5,000 to match your contribution. That benefit adds up over the years.
- See if refinancing makes sense. Interest rates are low, and refinancing could benefit you over the long term. While it may feel like a cumbersome or unfamiliar process, it could lead to thousands in savings, and all homeowners should be aware of it.
- Review credit card and bank statements. My family is guilty of having a Norton AntiVirus charge for several years that was on a computer we no longer use. It was on our bill each year, but we presumed it was for a current laptop we were using. Only when we made an adjustment to the plan did we notice the mistake. Bills like this can fly under the radar. So, it’s a best practice to review your annual statements and look for those recurring payments, and confirm that they are accurate and necessary.
- Complete or review estate planning documents. Do you have a will, power of attorney and medical directive? This is important for all adults, but extremely important for those with children or other dependents. We have plenty of experienced estate planning attorneys in our area. Schedule time to speak with one, and get a plan in place.
Tackling items like these is a great step in taking control of your personal finances, which will lead to confidence and peace of mind — important components of financial health. Good luck, and Happy New Year!
– Michael Collopy, CFP®, is a partner and financial advisor with Veracity Capital, LLC. Michael recently relocated to Canton from South Florida with his wife, Kathryn, and 1-year-old son, William.