Four Important Financial Items to Review Regularly

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There are certain times in life where it’s good to re-group and re-examine things. Most people tend to make New Year’s resolutions and people join a gym or start a new diet. Perhaps, you are starting a new job, getting married, buying a house, or relocating.

These are four essential items that should be reviewed when someone is going through any type of life change. Otherwise, they should be reviewed once a year, if not more. Start with getting them on paper and doing some preliminary research. Then most likely you’ll need to talk to a professional to make sure you are taking care of all the details.

Homeowners / Auto Insurance (also called Hazard or Property and Casualty)
Most homeowners pay their insurance through the lender’s escrow account. However, you should still review your insurance at least once a year. Shop around and make sure you have the best protection in place for the best rate. I grouped in Auto insurance as well because most folks bundle their home and auto for savings and convenience. It’s important to understand that bundling doesn’t necessarily save money, although it does in a lot of situations.

Life Insurance
Everyone should have some type of life insurance in place. Term is cheaper but it expires after a certain time. There are other policies such as whole life or universal policies which may be a better fit, but tend to be more costly per month. When setting up a life insurance policy, the insurance provider will ask you about selecting beneficiaries. Typically it’s a spouse or child or other loved one. These beneficiaries should also be reviewed on a regular basis in case changes need to be made. Connect with a local insurance agent who can guide you in selecting the right plan.

Estate Plan (will, trust and/or power of attorney documents)
Benjamin Franklin coined the phrase that two things are certain in life, death and taxes. With that understanding, creating some type of estate plan, even a basic one, is extremely important to make sure your loved ones and assets are taken care of after death. Certain instruments, like a trust, can be valuable for helping take care of matters even before death. The estate plan should work together with any insurance policies as mentioned above in number 2 and investment plans discussed below in number 4.

Budget / Savings / Investment Plan
If you don’t tell your money where to go then you will lose track of it. It’s important to have a monthly budget for spending, saving, paying off debt and investing. There are many schools of thought out there when it comes to saving and investing. I personally recommend Dave Ramsey’s plan. His 7 Baby Steps are a good place to start. It’s great to look at bigger financial goals once a year or so but looking at your budget monthly or even multiple times a month doesn’t hurt. Certain investing such as IRAs and 401Ks also come with tax benefits for some individuals. Connect with a tax professional to make sure you’re taking advantage of these deductions.

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