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Financial Tip

It is important that your children learn what they can do with money early in life so they will apply the lessons learned as they face the real world in future years.

Jim Stowers, Founder
American Century Investments^®

Managing Your Finances: an Annual Review

The New Year and tax season are great times to do an annual review of your finances and make any needed adjustments. In addition to insurance, here are some other things to review as part of your annual financial and estate planning.

Budget
Do you have a spending plan? This will make it easier for you to track your expenses and get on the path to financial independence. Project your income and expenses for the year. Look for ways both large and small to spend less throughout the year.

Emergency Funds
Make sure you have adequate savings or at least a plan to save during the year. Most experts say you should have at least three to six months’ worth of living expenses in a safe, accessible account in case of an emergency.

Investment Goals
Set specific investing goals, such as retirement or college education, and review how much money you’ll need to reach each of your goals. If needed, adjust your investment plan or goals to increase your likelihood of success. For example, you may decide to establish an automatic investment plan to invest toward your goals on a regular basis. Or maybe you planned to retire early but find you’ll have a greater likelihood of retiring comfortably if you work a few years longer.

Estate Planning
If you’ve established an estate plan, it’s a good idea to review it and the accompanying documents on an annual basis.

Beneficiary Designations
Review your beneficiary designations for insurance policies, investments and retirement plans to make sure they are accurate. If you’ve had any life or family changes you may need to revise your beneficiary designations.

Will/Trust Review
Review your will and trust documents to make sure they’re up to date. Discuss these documents with an estate planning attorney if you need to make any changes. Keep copies in a secure place, such as your attorney’s vault or in a safe-deposit box. Let trusted family members or friends know of their location.

Teachable Moments

Here’s a great conversation starter that will help couples – regardless of how long they’ve been married – get on the same page when it comes to saving and spending money.

Determine what’s important to you.
What do you want to accomplish and experience as a couple? Do you want to have children, buy a home, travel, continue your education or pay for your children’s college? Talk about the things that are truly important to you and create a list. Look beyond cars, electronics and material goods, and focus on the things that will enrich your lives and your relationship.

Prioritize the things you feel are important.
If you could only accomplish one thing, what would that be? Take the list you just created and rank the items according to your priorities.

Start living your life to support your priorities.
This is probably the most challenging step because it may require some sacrifices and compromises. But if both of you are on the same page and working toward the same goals, this step will provide the foundation on which you can build a lifetime of love and companionship.