Do you make financial decisions that impact important areas of your life without regularly reviewing your choices to ensure that they still meet your needs? If so, that could be a mistake. Your finances and personal circumstances are continually evolving, and a plan or product that meets your needs today may not be the best option down the road.
With the end of the year approaching, now is a good time to go over your finances and financial goals to ensure the choices you’ve made in the past are still the right ones for you today. Here’s a list of six items you may want to review.
1. Insurance Needs
If your employer offers health benefits, chances are you review your options every year during open enrollment. But what about other types of insurance you may buy, such as home, auto, and life? When you get the renewal notice from your insurance carrier, it’s easy to just pay it and renew your existing policy. But if you take a few minutes to review your coverage, you may discover the policy you have is no longer a good fit. Plus, if you take the time to shop around, you might be able to get the coverage you need at a lower price from a different insurance company.
2. Retirement Plan Contributions
According to Northwestern Mutual’s 2019 Planning & Progress Study, 15% of Americans don’t have anything saved for retirement. If you haven’t started saving, consider putting at least a little bit of money from each paycheck into a retirement account. Even small amounts can add up over time.
The same study also found that, on average, people believe there’s a 45% chance they’ll outlive their savings. If you’re already making regular contributions to a retirement fund, there are two things you’ll want to review—the amount you’re saving and your investment choices. First, make sure you’re saving enough to reach your goals. Consider increasing your contributions little by little until you reach the maximum amount allowed by federal law. Second, make sure your investments are properly diversified to reflect your risk tolerance.
3. Credit Report Information
Your credit score is one of the factors potential creditors review when deciding whether to grant you credit. So, it’s a good idea to make sure the information in your credit reports, which is used to calculate your credit score, is up-to-date and accurate.
If it’s not, it’s important to take steps to dispute and resolve any errors right away. You can request a free copy of your credit report from each of the three major credit reporting agencies each year at AnnualCreditReport.com. If you haven’t already gotten your free copies this year, take a few minutes to request them and carefully review each report for accuracy. If there is incorrect information in any of them that needs to be disputed and corrected, follow these steps.
4. Your Mortgage
Many things, including interest rates and your income, can change after you settle on the purchase of a home. These changes may mean the mortgage you currently have is no longer the best arrangement for you. Consider giving your lender a call and discussing your options. You may be able to qualify for a lower interest rate or shorten the term of your loan, both of which could save you a substantial amount of money.
5. Financial Goals
Achieving financial goals can help you achieve your life goals. Whether you dream of owning a home, taking a once-in-a-lifetime vacation, paying for your child’s college education, or eliminating debt, taking the time to identify and evaluate your monetary goals and monitor your progress can help you stay on track in meeting them. Since your priorities and finances will likely shift over time, it’s important to review your goals periodically to ensure you’re still working toward those that are most important to you. What better time to do that than now?
6. Make or Update a Will
It’s not a topic most people want to think about, but if something happens to you, your loved ones will be grateful that you took the time to ensure your affairs are in order. If you don’t already have a will, consider making one. And if you have a will, now’s a good time to review it to ensure it still honors your wishes and reflects any major life changes that have occurred since it was last updated.
Many of us become aware just how quickly time is passing at year’s end. By spending some time reviewing your financial plans, programs, and goals this time of year, you set the tone to make these things a priority in the year to come. And prioritizing your finances is a positive step on the journey to achieving your financial goals.
Jennifer Brozic began her writing career at seven years old, when she scribed the epic tale of her kite-flying (and skyward-looking) uncle crossing paths with a deep hole in a sandy beach. After earning a degree in journalism, Jen worked in the insurance and financial services industries before earning a master’s degree in communication management. She left the nine-to-five corporate world in 2010 and has been freelance writing ever since. Her areas of expertise include insurance, financial planning & budgeting, and building credit.
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