Thursday, January 3, 2013

Healthy Personal Finance Resolutions for the New Year

The new year is the time when many individuals start making resolutions to live a healthier lifestyle. And while resolving to eat better and exercise more is a good thing, you should be sure to make resolutions that pertain to the overall health of your personal finances as well. At The LWP Group, we'd like to be a part of your 2013 Personal Finance Resolution. Give us a call at (734) 424-1700 for some advise in how long-term planning should be a part of your 2013 plan.

Develop a budget and stick with it

A good way to start the year on the right track financially is to make sure that you have a budgeting system in place. Start by identifying your income and expenses. Next, add them up and compare the two totals to make sure you are spending less than you earn. If you find that your expenses outweigh your income, you'll need to make some adjustments to your budget plan (e.g., reduce discretionary spending).

Once you have a budget, it's important to stick with it. And while straying from your budget from time to time is to be expected, there are some ways to help make working within your budget a bit easier:
  • Make budgeting a part of your daily routine
  • Be sure to build occasional rewards into your budget
  • Evaluate your budget regularly and make changes if necessary
  • Use budgeting software/smart phone applications

Set financial goals or reprioritize current ones

The new year is also a good time to set new financial goals and reprioritize your current ones. Take a look back at the financial goals you set for yourself last year--both short- and long-term. Perhaps you wanted to increase your cash reserve or save money for a down payment on a home. Maybe you wanted to invest more money towards your retirement. Did you accomplish any of your goals? If so, do you have any new goals that you would now like to achieve?

Finally, have your personal or financial circumstances changed during the past year (e.g., marriage, a child, job promotion)? If so, would any of these changes warrant a reprioritization of some of your goals?

Make sure your investment portfolio is still on target

You'll also want to be sure to review your investment portfolio to ensure that it is still on target to help you achieve your financial goals for the upcoming year. To determine whether your investments are suitable for reaching your financial goals, you'll want to ask yourself the following questions:
  • Do I still have the same time horizon for investing as I did last year?
  • Has my tolerance for risk changed?
  • Do I have an increased need for liquidity?
  • Does any investment now represent too large (or too small) a part of my portfolio?

Make it a priority to reduce debt

Any healthy financial plan is one that makes reducing debt a priority. Whether it is debt from student loans, a mortgage, or credit cards, it is important to have a plan in place to pay down your debt load as quickly as possible. The following are some tips to help you manage your debt:

Keep track of all of your credit card balances and be aware of interest rates and hidden fees
Develop a plan to manage your payments so that you avoid late fees
Optimize your repayments by paying off high-interest debt first or consider taking advantage of debt consolidation/refinancing programs
Avoid charging more than you can pay off at the end of each billing cycle

Review/take steps to improve your credit history

Having good credit is an important part of any sound financial plan, and the new year is as good a time as any to check on your credit history. Your credit report contains information about your past and present credit transactions and is used by potential lenders to evaluate your creditworthiness. A positive credit history is important since it allows you to obtain credit when you need it and at a lower interest rate. Good credit is even sometimes viewed by employers as a prerequisite for employment.

Review your credit report and check it for any inaccuracies. You'll also want to find out whether or not you need to take steps to improve your credit history. To establish a good track record with creditors, make sure that you always make your monthly bill payments on time. In addition, you should try to avoid having too many credit inquiries on your report (these are made every time you apply for a new credit card). You're entitled to a free copy of your credit report once a year from each of the three major credit reporting agencies. You can go to for more information.

 The LWP Group is Here to Help
The start of a new year is a good time to meet with your financial professional at The LWP Group. We will work with you to:

  • Determine your income, assets, and liabilities
  • Identify financial goals
  • Understand specific products/services
  • Monitor your overall financial plan
  • Adjust your plan if needed

At the LWP Group, we're here to help you with all your estate planning needs. Including working with you to select the right gifting options that work within your overall plans. Visit our website or simply give us a call with any questions you may have. (734) 424-1700