WealthCare Advisors: Five Ways to Get Your Finances in Order in the New Year

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Michigan Medicine - January/February 2016

by Nicole Gopoian, JD, CFP®

Taking the time to organize your finances is a great way to start the year off right. Going through this exercise will provide peace of mind and empower you to make good financial decisions in the year to come. Here are five things you can do to gain insight into your financial position:

1. Know What You Have

  • Step One: Make a list of what you own (your assets).
  • Step Two: Make a list of what you owe (your liabilities). The difference between what you own and what you owe is your net worth.
  • Step Three: Examine your outflows. How much do you spend on an annual basis? Write down the real version. Not the pie in the sky number you keep telling yourself. 

2. Find Out Where Important Documents Are Located

Having the proper documents and statements is important, but if you don’t know where they are, they won’t do you much good. Be sure to know your logins, passwords and how to access electronic accounts. Consolidate all paper documents in one place so that you don’t have to go on a scavenger hunt when you need to find them. 

3. Know What to Keep and For How Long

Keeping important documents is vital to organizing your financial life. However, if you don’t know what to keep and how long to keep it, you may find yourself drowning in a sea of paperwork. Having a well organized document retention system in place is key to understanding your financial position. 

4. Plan for the Unexpected

Life is messy. Bad things can happen to good people. Consider what would happen in the case of job loss, illness, divorce or death of a spouse. Evaluate how one of these events could alter your financial position. Determine how it could affect your cash flow and impact your financial goals.

5. Protect Yourself

It’s important to protect yourself against the risk of the unknown. Develop a financial plan and stress test it for the following “What-if?” scenarios: illness, divorce, and death of a spouse. After you review these risks, create an action plan to protect yourself: draft the appropriate legal and estate planning documents, make sure you have adequate cash reserves, invest in portfolio strategy aligned with your risk tolerance, and review your insurance coverage. The only person in charge of making sure you’re ok is you. 

A successful journey requires planning, commitment and preparation for the unexpected. Contact WealthCare Advisors today if you need help developing a financial game plan. Our Financial Empowerment Workbook is a great tool to help you get organized and on the right track. Please ask for a copy, we’d love to share! Taking time to invest in your financial well-being is time well spent.