Written By: Dan Honsberger

Now that a new year is upon us, it is a great time to build upon past successes and good habits. Here are some ideas for using this year’s fresh start to improve your financial life.

Do a “Year in Review” for 2016, and evaluate progress toward your goals

Create a Net Worth Statement. Compare against last year, and over time.

If you’re working, your goal is likely to increase Net Worth over time. If you’re retired and living on existing resources, your goal should be to ensure your resources will sustain you for the rest of your life.

Are you paying down debt as desired? Are you saving as much as needed? Are you progressing toward retirement as expected?

Determine your goals and priorities for the New Year 

Think about how you will put your resources to work this year, and where you will focus your time and energy. Prioritize what is most important to guide your efforts.

Some ideas:

  • Plan for big life changes and their impact on your resources – retirement, job changes, family changes, etc.
  • Contribute to Savings – retirement, education, for a big purchase, etc.
  • Simplify your financial life by reducing unnecessary complications. For example, close redundant checking/savings, investment, or credit card accounts.
  • Manage risk by ensuring you have adequate insurance coverage. Applicable coverages may include Health, Life, Homeowner’s, Renter’s, etc.
  • Increase your Human Capital to increase earnings and personal satisfaction. Pursue further education or credentialing, grow your network, or identify new business opportunities.

Good habits for the New Year

Set a spending plan for the year that helps you achieve your priorities. Re-prioritize goals and spending as needed.

  • Update paycheck withholdings to take advantage of tax-advantaged investing.
  • Retirement Plan contributions – a good habit is to increase your contributions every year, as your salary increases, if you are not already maximizing contributions. In addition to increasing your retirement savings, many pre-tax retirement contributions have the added benefit of reducing your taxable wages.
  • If you have a High Deductible Health Plan through your employer that allows a Health Savings Account (HSA), take advantage of the “triple tax advantage” of the HSA by increasing your contributions. In short, contributions from your paycheck are not subject to the 7.65% payroll tax, are deductible on your Tax Return, and distributions used to pay for qualifying health needs are tax-free.
  • “Automate” your savings by requesting monthly transfers from checking / savings to your investment account(s).
  • Once 2016 taxes are completed, project your 2017 taxes and withholdings, or have your accountant or financial strategist do this, and update your withholdings to minimize taxes refunded or owed. This will avoid giving the government a year-long interest-free loan (your refund), or on the flipside, having to pay penalties for underpayment of taxes.

As your Personal CFO, we at JoycePayne Partners work with clients to evaluate many of these options at least once per year. If you have questions or are interested in any of these topics, please contact your Financial Strategist

Written By: Dan Honsberger