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Top Financial Resolutions
By Niki Mullinix and Mindy Zatta
Mosaic Wealth Consulting
 
The Thanksgiving and Christmas holidays are a time to eat, drink and be merry. Reality typically
sets in on New Year’s Day, leading to the traditional round of resolution-making. This year (in
addition to pledging to eat better and exercise more), you might want to consider these 10
resolutions to put your financial house in order.
 
1.Think strategically about finances. When it comes to vacations, most people plan months
ahead, carefully selecting a destination and the best way to travel. Financial decisions should
involve the same type of strategic thinking. It’s advisable to choose a financial destination and
then map investment, savings, insurance and household needs to follow suit. Individuals who
think strategically will know whether they are on track to reaching their goals and when they
need to adjust their overall plan to match their financial situation.
 
2.Develop financial relationships. It’s never a good idea to make major decisions in a vacuum.
Therefore it’s important to develop relationships with people who can help guide your financial
well-being. Get to know them, and let them get to know you. That way it’s more likely they’ll
provide the kind of personalized service that can keep your goals on track. A good accountant
can help save you money. A banker can help with loans when you really need them, and a
lawyer can make sure your personal affairs are in order. And a financial planner can act like a
quarterback.
 
3. Maximize savings, minimize debt. Limiting debt is critical to reaching your financial goals
efficiently. So it’s important to keep non-de ductible interest to a minimum. As you liquidate
debt, you may want to direct those dollars to savings. It’s advisable to maximize your savings by
contributing to a tax-deductible savings plan such as a 401(k), a health savings account or a taxdeferred
529 college savings plan. In addition, you may want to consider making major
household purchases on a “pay-as-you- go” basis. Anytime you reduce debt, you are, in effect,
giving yourself a pay raise.
 
4.Review household expenditures and create a spending plan. While often overlooked, cash
flow management is fundamental to financial planning. Instead of calling it a “budget,” think of
it as “a plan to spend money” in order to emphasize the importance of managing cash flow.
Basically, this means spending less than you earn. It’s advisable to set priorities, decide how
much to save and then adjust your plan accordingly. Try tracking your expenditures for three
months so you know where your money is going. This way it’s easier to make intelligent
decisions about spending habits.
 
5.Review employment and education options. Too many people fail to take advantage of
employee benefits, especially when it comes to retirement plans. Most companies match a
portion of an employee’s 401(k) contribution. Consider it “free money” or a return on your
investment. An increasing number of companies also match contributions
to college and health savings accounts and provide tuition reimbursement. An advanced degree can enhance your earning potential, so find out whether your company can help finance higher education.
 
6.Plan ahead for marriage and family. If you plan to marry or remarry someday, it’s advisable to start planning now. For example, do you and your partner see eye to eye on financial matters? Do you know whether you’ll use a joint checking account or separate accounts? How will a new family change your insurance and housing needs? Financial arguments can frequently lead to divorce. By planning ahead, you can help minimize stress on your marriage.
 
7.Develop a crisis management plan. A financial emergency usually strikes when you least expect it. The best hedge is an emergency savings account that ideally comprises at least three to six months of living expenses. Repay the account promptly, even if it means cutting back on other things. The goal is to avoid piling up debt -- or worse, bankruptcy. A crisis management plan can provide a sense of security and keep you moving toward your financial goals.
 
8.Review insurance needs. You can use insurance to protect your assets. Life insurance can provide an adequate financial cushion if a spouse dies. So it’s important to regularly review your policies. Many people overlook disability income coverage, but insuring against the loss of earning power is essential to sound financial planning. A long-term health- care policy can help you pay your expenses in the event of a serious illness or injury. And if you have a high salary or significant net worth, you should consider a personal liability umbrella of up to $1 million to protect against liability risks.
 
9.Leverage assets. You should consider lever- aging assets to take advantage of financial opportunities. If you have a low-interest mortgage, for example, think about directing any extra cash to higher-paying investments rather than paying down the loan. A home equity loan is usually cheaper than a consumer loan, and the interest is tax-deductible.
 
10.Manage your taxes. Taxes can take a big bite out of income and capital gains. You might consider the following steps:
 
• Maximize your and your spouse’s 401(k) and IRA contributions.
 
• Consider opening a health savings account, even if you don’t plan to use the money.
 
• Consider selling stock before the end of the year if it generates losses.
 
• Think about increasing charitable contributions or setting up a trust.
 
H. Nicole Mullinix and Mindy M. Zatta are Registered Representatives of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. CRN-1100767-011615
 


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