Four Steps for a Financially Fit New Year

Most people reassess their financial strategies when things aren’t going well. The economy might be faltering, someone in the family has lost a job or experienced a medical issue. Rarely do people make changes when times are good and might wonder, “Why would we disrupt our plans if taxes are at a historic low, unemployment is low, and the stock market is at all-time highs?”

While it might seem counterintuitive, now is actually a great time to consider making a few financial resolutions because of the current environment. With a new year — and a new decade — here, consider taking these four steps for a financially fit new year.

Review and rebalance your portfolio(s)

It’s smart to review all accounts in your portfolio and take stock of where you stand at year’s end. Weigh that against your financial goals for 2020 and determine how you can be proactive. You may be willing to have a riskier asset allocation, or maybe you recently made a large investment or a major life change and don’t want as much exposure to risk as you had in the prior year.

Consider what best fits your needs and adjust (or don’t!) accordingly.

My own financial New Year’s resolution: This year I’ll be switching from manual rebalance to automatic rebalancing to remove the emotion from my financial decisions.

Take an assessment of all consumer debt

Go through all bank, loan and credit card statements and any consumer debt or balances you’ve been unable to pay in full. If you have debt, review how you can best prioritize funds to pay it down in the new year.

Consumer debt can have a lasting impact on your credit score and your ability to grow your short- and long-term savings if it isn’t addressed as soon as possible. If you have a family or others depending on your income, it might be time to consider a protection-first approach to your 2020 financial plan, determining the best ways to ensure you and your loved ones are equipped to manage all financial obligations in the event of the worst. This might include purchasing a life insurance policy, replenishing your emergency savings account or updating your will. Without insurance, lingering debt could be passed onto a loved one should something happen — ensuring they are protected and able to manage those costs can make a huge difference.

My own financial New Year’s resolution: This year I will adhere to the rule of only using a credit card as a convenience and will pay the balance off in full each month.

Now the fun part … Plan your spending

So many of us suffer from the holiday hangover and live in fear of the January credit card bill or bank statement. In an effort to avoid that feeling in 2020, review your spending habits in 2019 and organize transactions into a few main buckets. Be sure to also include a “miscellaneous spending” category to account for minor lifestyle spending that might not fall into the “travel” or “gadget” buckets.

This exercise might be daunting if you’re tackling 12 months of spending at once, so this something that is easier done quarterly. Once you’ve evaluated your 2019 spending, see how it lines up with your 2020 priorities and where you might need to make some adjustments.

My own financial New Year’s resolution: In 2020, I’ll be taking my own advice to be better about planning and anticipating purchases before making them.

Meet with your financial professional

As the new year begins and you consider financial goals and priorities, it’s always good to check in with your financial professional. They can help you embark on the best path to achieving these goals and keep you informed of your policies and portfolios along the way. Human guidance is a valuable catalyst for making grounded money moves and can provide peace of mind knowing someone is guiding you with your best interest in mind.

As 2020 begins, carve out time to reflect, evaluate the current environment and where you stand and with the help of your financial professional, identify the goals that will strengthen your financial foundation in the year ahead.


(Article written by Brian G. Madgett)