Now that 2016 is underway, it’s time to start making good on those New Year’s Resolutions. January is the perfect time to make a fresh start, and whether it’s your health, your career, or your finances that are ripe for renewal, there is plenty of advice out there.
If one of your resolutions was to have a better relationship with your finances this year, Northwestern Mutual’s Rebekah Barsch has some tips for you. She likens financial planning with other relationships in your life. Just like your relationships with family and friends, she says, “creating a fulfilling financial life requires attention, consistency, and communication.”
Here are Barsch’s strategies for improving your connection with your money this year:
• Have regular dates with your financial plan. Okay, it’s not as fun as dinner and a movie, but making a date to sit down and look over your finances will help you know where you stand with your money, and it will feel good in the long run. Northwestern Mutual researchers found that only 25% of people who have a financial plan actually review it on a yearly basis. Examining your investments, savings, debt, and income gives you a chance to reconnect with your priorities, make needed adjustments due to market shifts, and look over your goals and objectives. Try to do this once a quarter—that’s just four times a year. You can always reward yourself with dinner and a movie afterward.
• Communication is key. Don’t like talking about money? You’re not alone. Studies show that folks would rather talk about death than finances. And four in 10 Americans haven’t talked to anyone about their retirement plan, even though it’s one of their top concerns. Talking to your loved ones, as well as a financial professional, is vital. Make it a priority to talk with someone about your financial life and get clarity about your hopes and dreams, as well as where you stand now.
• Plan ahead for a long vacation. Life expectancy is on the rise—are you ready for a long retirement? Think of your retirement as a 30-year vacation. You’ll need to have a plan for food, shelter, healthcare, entertainment, travel, and leaving a legacy to family who will outlive you. Make your “packing list” now and think about how you’ll fund the longest vacation of your life. If you need a “travel agent,” remember that there are many financial professionals who can help you figure it out.
• Drop some weight. Thirty-one percent of Americans are carrying extra weight—in the form of debt. Get financially healthy and make a plan to reduce credit card debt and chip away at any other debts. Make a budget and stick to it this year.
• Think long-term. According to the U.S. government, 70% of folks age 65 and up will need long-term care (LTC) at some point in the future. LTC isn’t cheap; Northwestern Mutual’s CARE Study (Costs, Accountabilities, Realities, Expectations) showed that it can account for up to a quarter of people’s monthly budgets. Exploring your options ahead of time can mean you won’t have to tap into savings or drastically cut discretionary spending to cover these costs in the future.
With planning and care, your relationship with your money can flourish in 2016.