Financial Tip from December 2007
Do some financial housekeeping for the new year
With the new year fast approaching, now's a great time to assess your household
finances and prepare for new opportunities. To help you get started, here are
a few suggestions.
- Set financial goals. Financially speaking,
where do you want to be a year from now? Will you start a small business,
cut back spending, or look for better returns on your investments? Take time
to dream; then put your goals in writing. Thoughtful planning is a first
step toward prioritizing both spending and saving.
- Review your credit report. The law requires
each of the three major credit bureaus to give you a free copy of your credit
report every twelve months. The reports shouldn't contain significant errors;
if they do, make sure the discrepancies get resolved.
- Make or update a home inventory. Go through
your house with a video camera and describe what you see, along with pertinent
information about your most valuable assets (purchase dates, prices, estimated
values). Make an extra copy or two of the tape. Keep one for yourself, put
one in a safety deposit box, or send one to a friend or relative (preferably
in another town) for safe keeping. Should you experience a fire or other
disaster, your home inventory can be vital for getting insurance claims approved.
- Increase your savings. The start of a new
year is often a time when companies offer cost-of-living adjustments (COLAs)
to their employees. If your employer provides such a benefit, consider contributing
a portion of the increase to your 401(k) plan or other savings account. It's
a relatively painless way to save more.
- Calculate your net worth. This is a great
yardstick for measuring your household's financial growth (or shrinkage)
from year to year. Simply put, your net worth is the value of your assets
(house, personal property, bank accounts, car, investments) minus your liabilities
(mortgage, credit card balances, loans). Widely available financial software
can help you automate this task.
- Purge old financial records. If you're
a financial packrat who keeps old cancelled checks and bank statements long
past when they may be needed for an IRS audit or your own use, consider shredding
them.
If you'd like additional suggestions for setting your financial house in order
this coming year, give us a call.