Investing For Your Future
Monthly IFYF Investment Message
December 2006
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Happy holiday wishes from Cooperative Extension financial educators nationwide. The end of one year and the beginning of the next is a good time to perform an annual financial check-up. That way, if anything is amiss (e.g., lack of a will or inadequate investment portfolio diversification), you can put it on your "to do list" to address during the coming year. Annual check ups are nothing new for most people. We regularly have check ups in our life (medical, dental...even automobile tune-ups). It's a good idea to perform routine financial self-assessments to put your financial house in order.
How do you begin? By taking a hard look at your current financial behaviors and recommended practices that you may or may not be performing. Below are some "check-up questions" suggested by the Office for Financial Success at the University of Missouri-Columbia. The list is not meant to be exhaustive but, rather, a starting point to evaluate the strengths and weaknesses of your current financial situation. Questions with a "no" answer indicate opportunities for financial self-improvement.
Organizational Questions
- Do you know where important financial and legal documents are located?
- Do you have "a system" for maintaining order?
- Do you shred, rather than simply throw away, old documents that contain sensitive information?
Insurance Questions
- Do you need to buy life insurance to protect dependents or increase/decrease existing coverage?
- Are current levels of insurance coverage (health, property, disability, other) adequate?
- Do you have coverage that should be increased, decreased, or dropped?
- Have you shopped around to ensure that you are still paying the best price for coverage/service?
Debt and Credit Questions
- Do you have a plan in place to eliminate existing debt? Are you following the plan?
- Is there an opportunity to get a better rate on interest charges?
- Do you have too many credit cards and should you consider canceling some of them?
- Have you reviewed your credit report during the past year and corrected any errors?
- Does refinancing any existing loans (home mortgage, auto, etc.) make sense?
- Does it make sense to consolidate debt or is this simply a short-term fix for a bigger problem?
Saving/Investing Questions
- Do you have a financial plan with written goals and action steps?
- Do you have a regular savings or automatic investment plan, such as an employer 401(k)?
- Do you have an emergency fund of at least 3 months household expenses?
- How did your investments perform during the past year?
- Are you comfortable with your current investment portfolio asset allocation?
- Do you contribute enough to an employer savings plan to receive the maximum company match?
- Are you contributing to a Roth or Traditional IRA?
Estate Planning Questions
- Do you have a will? How recently was it reviewed or updated?
- Do you have other important legal documents such as a living will and power of attorney?
Overarching Financial Planning Questions
- Where are you financially?
- Where do you want to be financially?
- What do you need to do to get to where you want to be?