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02/01/2002
Step Into 2002 With Your Right Foot Financially
If you are like most Americans, you may wish that you could snap your fingers at midnight on New Year’s Eve and make all your resolutions for the coming year come true. Unfortunately, most resolutions take time and hard work. If one of your resolutions is to improve your finances, here are a few tips to help you begin the new year on the right foot:
Begin a systematic investment plan.
Begin a systematic investment plan by investing a specific amount of money every month into a retirement or other investment account. This amount may be automatically deducted from your checking account or paycheck so you don’t get a chance to spend it or miss it. Keep in mind that systematic investing does not assure a profit and does not protect against loss in declining markets. Since such a plan involves continuous investment in securities regardless of fluctuating process, you should consider your financial ability to continue purchases through periods of low price levels.
Determine your net worth.
Add together the value of everything you own such as your home, cars and investments. Then, deduct your liabilities (debts) from that number to determine your net worth. Every year you should compare your net worth to previous years. If it’s increasing, then you are on your way to achieving your financial goals. If your net worth is not increasing or declining, then you may have to re-evaluate your situation and perhaps reduce debt or increase income.
Purchase personal-finance software.
Personal-finance software available can help with budgeting, bill paying and checkbook balancing. If your bank or brokerage firm offers online banking, you may be able to automatically download your account information into your software for easy maintenance of your finances. Personal-finance websites also offer tools that could be helpful.
Pay down your short-term debt.
It is vital to pay down short-term debt such as credit cards. It does not make much sense to be paying 15 percent interest on your credit card, yet saving every penny in a savings account that earns 3 percent interest. You may be better off putting that money toward your credit-card bill.
Increase the percentage allotted to your retirement accounts.
Every year you should be increasing the percentage you contribute to your retirement plans such as a 401 (k) or Individual Retirement Account. You should contribute at least up to the maximum amount your company will match. The more you contribute pretax, the more your money will have a chance to accumulate and compound. Especially now with the new tax law changes, many accounts are allowing you to contribute more each year.
Set some family goals.
At the beginning of every year, sit down with your spouse and establish or review your financial plan. Maybe you have a child ready to go to college, are expecting a new baby or planning a family vacation. Determine how much you need to save and invest to meet your immediate and long-term goals.
Review your insurance policies.
Make sure your insurance policies provide enough and the right type of coverage for your needs. Also, if you have recently married or added a child, make sure the beneficiaries of your policies are updated. If you have life insurance through your company, you may want to consider buying a separate supplemental policy that can offer you coverage in case you are laid off from your job.
Your financial consultant can help you take the steps toward developing a comprehensive financial plan to reach your goals in 2002 and beyond. Just resolve to make your finances a priority in the new year.
Thomas C. Beadnell is an investment broker for A.G. Edwards & Sons, Inc. in Watertown, South Dakota. For more information he may be reached at 800-952-2253 or tc.beadnell@agedwards.com
On the Web: www.agedwards.com
Thomas C. Beadnell
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