A happy 2019 to you all.
I hope last year was a great one for you, and that you’re looking forward to this new year, with the chance for new beginnings. I love starting fresh with the opportunity to set new goals and priorities.
To that end, I’d like to share 5 financial tips worth considering as you think about how you might want to tune-up your financial life this year. These are just suggestions, but in the many financial conversations I’ve had with others, these five points hit on resolving some of the biggest financial concerns I hear when I talk with others.
I hope you enjoy my latest (and first!) post of 2019.
Start a budget
If you’re a regular subscriber, you’re probably sick of hearing me bring up this topic (I’ve discussed it here, here, and here most recently). Please remember two things. First, budgeting is necessary for every family, especially if you’ve never done it before. Second, budgeting can be hard. Why? A few reasons stand out:
It forces you to look closely at your finances, something which can be scary or, unfortunately, make you feel a bit embarrassed.
It’s a new habit for most. New habits take consistency and time to establish. Which means work.
It requires behavioral change to make an impact. Finding ways to save money is the first step, the next, more difficult step it to adjust your behavior so the changes are real and lasting.
While budgeting is necessary for all of us, it doesn’t have to be hard once you’ve committed to it and established a routine.
Get some life insurance
Thanks in part to workplace benefit programs, life insurance has become much more available and accessible to families. However, the life insurance you may have through work likely doesn’t have a large of a death benefit. As a result, most families are under-insured when it comes to life insurance coverage.
Fortunately, getting a fairly inexpensive term life insurance policy shouldn’t cost you very much. A young, healthy individual in their 20’s or 30’s can get a $250,000 to $500,000 policy for around $50 per month.
How much life insurance you get isn’t as relevant. Aiming to have a $500,000 to $1,000,000 policy should be sufficient to cover most of your expenses when you die, payoff your debts, and still have a healthy nest egg left over for your family’s future. The more important thing is to get coverage in place.
Create a will
Do you have a plan for how your assets will be divided among your family if you, your spouse, or both of you die? A will provides clear instructions answering these and other questions.
A will gives you greater control over what happens to your estate, allows you to choose your beneficiaries and assign them specific assets (who gets what), lets you choose your executor (the person(s) who settle(s) your estate after you die), and designate legal guardians for minor children, among many other possibilities.
An estate planning attorney can help you think through the various options for how to set up your will and help you draft the document. For the brave do-it-yourselfers there are also online resources such as LegalZoom or Nolo.
Make a savings goal and automate it
Is there something you’d like to start saving for in 2019? Retirement is an obvious and important one, but what else? Are you thinking about buying a new home in a few years, or would you like to save for your child’s college education? Give some thought to these and other important financial goals this year...and then automate the heck out of ‘em!
When you automate your savings, you remove the friction that can come from making the decision each and every time of whether or not you should set money aside. It can be a hard choice in the months when money feels tight. Automating those payments means you need to make the decision only once and your savings goal is regularly being contributed to.
Create a simple wellness plan for yourself
What does health and wellness have to do with your finances? Pretty much everything, especially as you age. The financial implications of long-term care, hospitalization, and surgeries is why many financial professionals are telling retirees to plan to spend at least $250,000 during retirement on health-related costs alone!
Not all health costs are preventable, but many are. To increase your wellness, put a personal health plan in place. It doesn’t need to be much. Simply walking for 30 minutes 4 days per week can make a significant impact on your physical health and your wallet.
I hope this article has been helpful as you consider ways to tune-up your finances for 2019. You may have something else on your financial to-do list. Whatever your list looks like, keep it short and find a way to get it done while you’ve got some New Year momentum.