A Financial Wellness Check: Preparing for a Prosperous New Year

A Financial Wellness Check: Preparing for a Prosperous New Year

As we approach the end of the year, there is no more critical time for planning your finances. It’s your last opportunity to review where you are with your 2023 goals and your best opportunity to start the new year off right. More importantly, it’s a critical time to review your long-term goals and see if you are still on track to achieving them.

Here’s a planning checklist to transition you from 2023 into 2024 for the best results.

Review, adjust, and set goals

First, consider your short-term goals, which you want to achieve in the near term. Are you on track to achieving your existing goals? If not, why not? Do they need adjusting? Are they still priorities? Do you have any new short-term goals? It’s essential to ensure your short-term goals are achievable based on their timeframe and how much you’re allocating toward the goal.

Do the same assessment for your long-term goals and determine what adjustments you need to make to get on track, including adjusting your timeframe, changing your investment mix, or allocating more savings toward the goal.

Make sure you have adequate emergency fund savings
  • One thing that changed for many people is the balance of their emergency savings. Your priority is to ensure you have three to six months of liquid savings to cover emergency expenses, such as car or appliance repairs, extra medical bills, or unexpected life events.
  • Also, your short-term goals may have changed. If you’re planning on buying a new car or taking a vacation, it would be essential to have cash instead of relying on debt.
Review your insurance coverage
  • The first place to start is with your homeowner’s insurance. Are your replacement limits keeping pace with housing prices? Also, check your liability coverage on both your homeowners and auto insurance. If you already have the maximum liability coverage, consider a personal liability umbrella policy (very inexpensive).
  • You should also review your life insurance policy every year. Have your family protection needs increased (i.e., a new addition to the family)? Are your beneficiary designations current? Is it time to consider converting some of your temporary term insurance to permanent coverage?
  • If you have disability coverage, is the benefit amount keeping pace with your income?
  • If you are approaching your fifties, should you consider purchasing some long-term care insurance? The cost of coverage will only increase, and it could be critical in protecting your assets if you or your partner require nursing home care. At least discuss it with your advisor.
Get your estate plan in order
  • With estate planning, you can never set it and forget it. Any life change—childbirth, a change in marital status, a home purchase—should prompt a review of your legal documents. That would include updating your will and living trust and ensuring your power of attorney and medical directive are current.
  • It would also be essential to check that the beneficiary designations on your life insurance and retirement accounts align with your will or living trust.
Review your retirement savings
  • There have been significant changes in the stock market. Are your retirement account holdings still positioned how you want them, or do they require rebalancing to align them with your target allocation?
  • Have your retirement goals changed? Do you now plan on delaying retirement or hoping to retire early? Review your time horizon. Are you one year closer to your retirement goal? Check that your portfolio is positioned to achieve the returns necessary to meet your goals.
  • Did you get a salary increase? Talk to your employer about bumping up your contributions. You should ensure you are receiving the full matching contribution from your employer.
  • Have you accumulated a sizable amount of funds in your IRA? You may want to consider converting a portion of it to a Roth IRA to take advantage of its tax-free income in retirement. Check with your advisor to see if this might make sense for you.
Check to see that your investment allocation is aligned with your objective and risk profile
  • After an up year in the stock market, you may need to rebalance your asset allocation to ensure it is still aligned with your objectives and risk profile. Your stock allocation may now exceed your risk profile and require shifting a portion to reduce risk in your portfolio.
  • If you must sell some stocks to accomplish this, look for capital losses in your portfolio that can be used to offset those gains for tax purposes.

The good news is that you don’t have to accomplish all this at once. Schedule these actions over several months and check them off as they are completed. It might be a good idea to share this checklist with your financial advisor to keep you on track. Not only will they be useful in helping you with many of these action items, but they can also help hold you accountable for getting them done.

At Uncommon Cents Investing, we are committed to understanding your unique financial landscape and tailoring strategies that resonate with your aspirations. Contact with us today, and let’s navigate the path to financial success together.


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More About the Author: Sheena Hanson

Sheena is a highly regarded financial expert known for her clear explanations and practical advice on complex financial matters. She earned her CERTIFIED FINANCIAL PLANNER™️ designation in 2010 and holds a Bachelor of Science degree in Finance from the University of Wisconsin LaCrosse.