You may have noticed a few gray hairs or a new set of "character lines" when you smile. The news about the economy is less than encouraging. You might also be worried about your finances as you inch closer to retirement. Relax! Resolve that you will rev up your finances in the new year for a worry-free future.
Knowledge is power, so the first step to easing your financial fears is to learn all you can about your finances and plan for the future. Here are ten steps to rev up your finances.
- Prepare a balance sheet. On one side, list all your assets. On the other, list all your debts or liabilities. Subtract one from the other and you have a rough estimate of your net worth. If it is not where you want it to be, take steps now to bring it up to par.
- Eliminate all debt. Think how good it would feel to have your mortgage paid off, all loans and credit cards at a zero balance, and no outstanding debts. Now that is freedom!
- Conduct a thorough house inspection. You may consider downsizing, or simply remodeling your current home. Keep in mind your future needs. Do you have stairs that may become difficult to navigate? How about a step in shower for easier bathing? Round handles can become painful to use if you develop arthritis. Consider switching to lever handles and toggle switches instead of dimmer switches.
- Assess your life insurance needs. Ideally, you want your beneficiaries to maintain the same lifestyle, so make sure the benefits will support that without letting the premiums bankrupt you.
- Start looking into long term care insurance. This protects you and your heirs, especially if you have accumulated a lot of assets. If you become disabled, a long stay in a special care facility can quickly wipe out a lifetime’s worth of hard work and sacrifice.
- Get healthy. Lose those last few pounds. Eat more fruits and vegetables. Work exercise into your daily routine. The healthier you are, the more you can reduce medical costs. Keep up to date on exams, so if there is a concern, it will be caught in its earliest stage.
- Establish or build up your emergency fund. The more money you have put aside, the greater your peace of mind.
- Have a son or daughter graduating soon? Help them attend college the old-fashioned way through student loans, grants, scholarships, and student work programs. Avoid large loans that could financially cripple them, but never sacrifice your own financial future. Your kids will appreciate their education much more if they work for it.
- Look at the big picture with a trusted estate planner. You can get started at your bank, and they can steer you in the right direction if you need further help. You may be surprised at the different outcomes just a few crucial estate planning decisions can make.
- Prepare a future budget. Looking ahead, decide how you want to spend your money. Maybe you want to travel more. Maybe you’d like to acquire a second home. You might want to move altogether. Maybe you want to pursue a life-long dream. Planning ahead will ensure you have enough funds to enjoy those dreams.
As you start planning for your future, you may realize you need more money than you anticipated. You could increase your cash flow by working more, getting a better paying job, or taking on a temporary second job. You can also cut expenses now so that you can save more for your future. Resolving to rev up your finances this New Year will set you solidly on the way to a worry-free future.