A new year brings new resolutions. In fact, 45% of Americans typically make New Year’s resolutions, according to a Statistic Brain survey, and 34% of those resolutions are related to money.
Resolutions can sometimes be difficult to keep, but a few simple principles can help you stay on task. The USAA Financial Rediness Score FRS tool incorporates our core advice principles and helps you see where you stand today. It also suggests steps you can take to improve financially and stay on course if challenges arise.
Let’s discuss those principles:
Spend less than you earn. This sounds simple, yet it has become more challenging. Everywhere we turn, we’re bombarded with advertisements, credit offers, solicitations for money — and the list goes on. FRS helps assess whether you manage your spending and credit in a healthy manner and points you to additional resources for help.
Protect your life, loved ones and possessions. We are a financial services company that offers insurance, but that’s not why this principle is important. Imagine you’re in an at-fault automobile accident and have insufficient coverage, putting your finances in jeopardy.
Or what if you depend on a loved one for income and he or she dies, leaving you to struggle both emotionally and financially? FRS will assess your current coverage and guide you to find out how much insurance you may need.
Save enough for emergencies. Unfortunately, no one is immune to life’s many curveballs. You can either be prepared or put your financial goals at risk. FRS will assess whether you have an adequate emergency fund and help you create a plan to achieve this goal if you haven’t already.
Save now for retirement. Young, old or somewhere in between, retirement planning is important. The sooner you get started, the better off you may be. FRS will assess your retirement needs and help you dive deeper into retirement planning.
Have a will and other legal documents.
Whether single or married, with or without kids, everyone should have some basic legal documents in place. Wills are not just for the wealthy.
Have a plan, review it annually and update with major events.
Getting from point A to point B is much easier with a map. Having a plan for your financial goals is no different. This can be as simple as a starting with a budget, but everyone should know what they need to do financially and the steps needed to get there.
I encourage all of you to stick with your money-related New Year’s resolutions in 2017 and beyond. If you haven’t already, use the FRS tool for your own assessment. I’ve got a few money-related resolutions of my own, and FRS has given me a road map to help.
01-09-2017 07:10 AM
Content provided courtesy of USAA.
By Mikel Van Cleve, CFP®