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Financial Resolution

Although your days and nights are becoming filled with holiday planning, take a few hours to get your financial house in order for the new year. For your efforts, you’ll be rewarded with more time for family and friends, less paperwork, and some extra cash in the bank.

Before you can streamline your financial life, you need a clear picture of what you own. Go through your files, drawers, and safe-deposit box, and make a list of your bank, brokerage, and investment accounts. Then note where your will, IRAs, and insurance policies are stored. Here are other good New Year’s resolutions:

Consolidate accounts
You can easily corral your financial affairs into just two or three accounts, such as checking for routine expenses and a money-market mutual fund that is linked to your bank and its related brokerage arm.

Once there may have been good reasons for having several bank accounts; for example, an account close to work and another close to home. Now, it’s time to consolidate.

You may even save money because there’s less likelihood of low-balance fees.

Draw up a will or trust
More than 70 percent of Kentuckians have neither, which means they have no control over how their estate will be divided or who will rear their minor-age children should the parents die. If you have a will, review it at least every three years.

Review debt and investments
Calculate your credit card debt. If it is more than 15 percent of after-tax income, adopt a strategy for reducing the total. Consider using a home-equity loan and vow to put away the credit cards for a while.

Increase the liquidity of your investments. The first year of a president’s term is often marked by volatility in the stock market, so keep extra cash aside for emergencies or to move into promising segments of the market.

Jeffrey Hirsch, editor of Stock Trader’s Almanac, notes that the market tends to soar in years that end in 5, such as 2005. The Dow Jones Industrial Average, a widely watched indicator, rose 33 percent in 1995 and 28 percent in 1985. It hasn’t gone down in a year ending in 5 since 1885.

Review bills monthly
Establish a system to regularly review bills such as your credit card and phone bills. Occasionally, a vendor puts through a charge twice—and not necessarily in the same billing cycle. Compare receipts to monthly statements.

Hospital bills are particularly error-ridden, according to Gary Schatsky, a New York City financial planner. He says patients pay an estimated average $1,300 a year in overcharges.

If a claim is rejected by your health insurer, find out why. It may be a simple data-entry error.

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