Finally Get Financially Fit for the New Year

Happy New Year!   Will you make a new year’s resolution? Some of the most common resolutions can be the most difficult to keep. On the other hand, the rewards of making a new habit your own can be outstanding. One reason that some New Year’s Resolutions fail is that we tend to focus on the things that are the most urgent and immediate, and neglect the things that are truly very important, but not as time-sensitive. Take a few minutes to think about what’s most important to you this year, not just what is most urgent.

Five Important New Year’s Resolutions

1. Stop Procrastinating the Important Things in the New Year

resolutions for estate planning new yearOne of the major problems that prevents people from being at their best is putting off important things that are not necessarily urgent. In his book, the Seven Habits of Highly Effective People, author Stephen Covey asks us to consider which category each “task” we need to do falls in. Two of his four categories are:  1) Tasks that are urgent, but not that important and 2) tasks that are not that urgent, but are important.  Unfortunately, we spend most of our time doing urgent tasks . . . but those things may not necessarily be the most important things.  Learning to be effective means letting go of some things that demand immediate attention when they really are not all that important. Take a step back from the urgency and immediacy of your life . . . are you spending your time on the important things, or just the urgent ones?

2. Finally Get Out of Debt or Reduce Your Debt

One of the most common resolutions is to reduce or pay off debt. Getting to the goal here can seem an enormous task for those who have quite a bit of debt, but it is definitely manageable with a bit of planning and self-restraint. Reducing debt and increasing savings can be a very important part of your estate plan. As you pay off your debt, you will have additional cash available, and converting some of that cash to savings, both for retirement and for funding your revocable living trust can be smart for you and your family. The new year is a perfect time to put your debt reduction plan in action.

3. Start that Trust Fund and Estate Plan

This is one of those important things that almost never feels urgent until it’s too late. Estate Planning always seems like something you can just ‘worry about later’ when you’re older. This is very unwise — it is neglecting something important in favor of doing the urgent things, that might be less important. Another misconception here is that Trusts are only for the very wealthy. The reality is that funding a trust can be done slowly over time, in small deposits or by buying life insurance and naming the trust as the beneficiary of that policy. The revocable living trust is a way to make sure you leave something for those you love most — it is part of taking care of your spouse and children in case you should ever suddenly die or become incapacitated. Take the new year to get your financial life in order, including starting or updating your estate plan.  It is an incredible gift to those you will leave behind, and you’re never too young to get started.

The New Year is also a prefect time to create or update your will, and make sure your family is protected.

4. Start Saving Money

saving money through estate plans

Once you have your debt under control, it’s time to start putting some money aside. Start by creating an emergency fund and contributing to your retirement. At minimum, you should opt-in to your employer’s 401k and contribute at least as much as the employer will match. This chart helps estimate when you can retire based on your savings rate. Saving money can seem painful. For those who don’t want to think about it, setting your savings on autopilot can be a very effective strategy for making savings less painful.

5. Give to Charity

Through structured, planned giving as part of your estate plan, you can ensure the financial security of organizations that are dear to you. Again, it may seem like you need a lot of money to do this, but you don’t. Including a church or other charity in your will or trust is a great way to leave an important legacy, and you can do this through tiny monthly contributions to a savings account, or through your life insurance plan. This new year can be an opportunity to express the values most important to you through planned giving.

If I can help you establish or update your estate plan, give me a call.