A new calendar year is a good time to check your financial well-being. Whether you're staring down a mountain of debt or just need a financial check-up, here are 10 tips to help you take better care of your finances and make resolutions for the new year.
1. Set and review budget goals
Do you need to pay off debt, save more or put more in retirement? Writing goals down is the first step. Then take an inventory of your current money going out. That will help you set up actions to start moving toward your budget goals.
2. Make sure you have emergency savings
If the pandemic taught us anything, emergencies could spring up anytime—a job layoff, an illness that takes you out of work. Even an unexpected car or home repair can set you back if you're not ready. Learn how to build (or rebuild) your savings so you're always prepared.
3. Check in on your retirement savings
A volatile market can be problematic for your retirement savings plan. But now is not the time to make impulsive decisions.
The markets don't like uncertainty, so your investments may face some difficulty in the short-term as a result of these issues, but it's important to maintain a longer view when looking at your retirement savings," explained BOK Financial® Chief Investment Officer Brian Henderson. Take a moment to review your retirement investments and speak with your advisor.
4. Be aware of inflation rates
Inflation has been on everyone's mind this year, with the consumer price index hitting 7.1% over the past 12 months and prices increasing on just about everything. The Federal Reserve is easing this by raising interest rates in hopes of reducing demand and lowering costs. This also impacts your investments. Understanding how this works can help you set your financial strategy.
5. Be prepared for a new mortgage environment
Interest rates are also impacting mortgages. A 30-year fixed-rate mortgage averaged more than 7% in late October. This means fewer buyers are willing to take the leap and sellers need to rethink asking prices.
We've taken a step in the right direction toward a more balanced market where neither buyers nor sellers have the upper hand, said Ryan Bennett, home loan regional director with BOK Financial Mortgage. If you're thinking of buying or selling, keep track of where mortgage rates stand to time your move just right.
6. Review wills, trusts and beneficiaries
The alarming number of deaths during the pandemic's peak put a lot of loved ones in the difficult situation of handling financial arrangements.
The biggest challenge is not knowing what to do, said Ry Whiteman, manager of BOK Financial's Trust Services Group. Take time to review beneficiaries and either review or create your will or trust to ensure your assets are distributed according to your wishes.
7. Protect your assets
Insurance will protect your money if disaster strikes. Check that you have basic insurance in place—health, car and home—and consider life insurance to cover funeral costs and expenses, and umbrella insurance to cover any lawsuits. Take a minute to review your rates and do some comparison shopping.
"Very few policyholders initiate insurance reviews. They file away their renewals, barely glancing at their coverages to see if they've changed with the times," said Vicky Nelson, insurance risk consultant at BOK Financial Insurance, Inc. "However, we recommend an annual insurance review because the best financial plan and investment strategy can't overcome inadequate coverage for large losses, accidents, deaths or injuries."
8. Review your credit
Do you know what your credit score means? As our article in the Statement explains, A credit score is a three-digit number that influences your ability to borrow money, like vehicle or mortgage loans, and influences the interest rate you are able to secure. Now's the time to check that your credit score is in good shape. And while you're at it, order a free credit report and check for fraudulent accounts to help prevent an identity theft crisis.
9. Check in on educational funding
If you have student loans, are saving for kids or grandkids, or plan to go back to school, see how you can contribute more and make the most of an educational savings plan, such as a 529 plan.
10. Ensure tax documents are up to date
Review your address and W-2 information in your employer system. This will ensure that your W-2 gets to the right location—on time. In addition, double-check your tax withholding details.
Maybe you realize you didn't get 2022 quite right and you are going to have to pay more than anticipated, so now is the time to fill out a new withholding form or increase estimates to get it adjusted for 202, said Kimberly Bridges, director of financial planning at BOK Financial.
Whether you run a tight ship when it comes to your finances and just need a check-in, or you need to set some major goals and get things in order, the new year is a great time to get financially fit and brush up on your financial literacy.