Make this the year that you get your financial life in order.

Document your Financial Goals.

We are more likely to meet our goals when we document them and share them with others.

Be as specific as possible.

People often say, “I want to buy a house”, but when I ask for the price range of a house they would be happy with, they don’t know. This is the same with house repairs and vacation goals. Do the research, document the value, and list a timeframe. You can make changes if needed - but you are much more likely to meet your goal and be happy with your progress along the way when you take this step.

Update your Balance Sheet.

Document your current assets and debts on one page.

Add the rate to your savings accounts and the rates for your loans. This will make it easy to review them periodically and determine if you need to make a change.

Organize the Balance Sheet with the most liquid assets on top (cash) to the least liquid assets on the bottom (real estate).

·       Evaluate your cash reserve. Is it enough to cover you if you lose your job or have an emergency?

·       Do you have a lot of old 401ks from previous employers? Consider consolidating to make it easier to manage. [Video on consolidating old employer plans]

·       Is there an opportunity to refinance high-interest-rate debt?

You don’t need to update this monthly - annual is fine. I show clients their ‘Balance Sheet Over Time’ every year and even though it is a simple spreadsheet, they love it. We get into a rut and feel like we are not making progress financially - viewing our ‘Balance Sheet over Time’ shows that’s not the case. Especially in a year when the stock market does terrible - viewing your Balance Sheet reminds you that there is more to your Net Worth than just the 401k.

Update your Spending Plan for the New Year.

Review your previous year’s spending and decide on where you can make adjustments.

If you do not track expenses, review the last 1-3 months to get a good estimate. You can try different apps to track this, but I have always used an Excel spreadsheet and it seems simpler to me. I have a lot of transactions with 4 kids, a house, 2 rentals, and a dog, but documenting my expenses in Excel takes me just 30 minutes a month.

Challenge yourself to increase your savings by a small amount and increase the payments you are making towards debt.

Review all of your Insurance Policies in detail with your Provider or Broker.

Our lives are always changing and things we don’t think are a big deal could require a change in coverage.  

Did you start employing a housekeeper?  Inherit some jewelry? Your provider has an annual checklist for you to review and complete that will help them decide if changes need to be made.

Review your Estate Planning Documents.

Review your current documents (Will, Power of Attorneys, Trust, etc.) to see if there need to be any updates.  

If you don’t have estate planning documents yet, this is the year to get started. Everyone needs some level of estate planning - not just those with kids and a house.

Before reaching out to an attorney, check to see if you have a ‘Legal Services’ benefit through your employer. This is becoming more and more common and it is significantly cheaper than paying for an attorney (on the order of $200 versus $2,000). You elect this benefit during open enrollment, so you have to decide if you are comfortable waiting until then. If you don’t document who you want to get your assets the courts will decide, and it might not be the person you want.

Freeze your Credit.

This is one of the best ways to prevent identity theft.

Credit monitoring services tell you after the fact that something is wrong. You still have to invest time and money to fix the breach. Freezing your credit is preventative. No one can open an account in your name or buy a house in your name with a freeze in place. If you plan to obtain a loan and need to lift the freeze temporarily, it is easy enough to do from your phone. [Video on credit freezes]

Practice Gratitude and Patience.

Be thankful for all you accomplished last year and get motivated to make financial progress this coming year. If you feel overwhelmed and it is keeping you from getting started, talk with a financial planner who can help you develop a plan that you feel good about.  

originally published December 19, 2012

Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.

Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.