The start of a new year is a great time to examine your financial fitness. Instead of making a hasty resolution, which can have an 80 percent chance of failing1, create a thoughtful framework to help you better stay on track. What’s the difference? Setting goals is a healthier habit because they are generally targeted to achieve a specific objective. Plus, goals are defined, with a clear end point.
Al Chingren, Vice President of Personal Finance and Retirement Solutions, advises clients to review their overall financial health when developing a plan. Sound overwhelming? It doesn’t have to be. Consider these basic steps.
Five Steps to Fitter Finances
Once a year you should:
1. Exercise Goal-Setting Skills
Establish a plan if you don’t already have one. Or, review the one you have. Your plan should include short-term goals such as creating a budget, setting up an emergency fund and paying down debt. Then move to longer-term goals, such as paying off a house, paying for a child’s education and, of course, retirement.
2. Play Offense for Your Credit Score
People tend to overlook checking their credit report, but it’s important to verify your outstanding debt and whether it’s accurate. You don’t want any surprises when you need credit. A free credit report is available to you every single year.
3. Tackle Important Documents
If you’ve already created key financial documents, review them to make sure beneficiaries and other details are still accurate. Or, consider establishing a will, trust and power of attorney to ensure your wishes will be fulfilled as you envision.
4. Catch Your Breath by Consolidating
Tracking your finances can seem like a full-time job. Consolidating can save time and give your full financial picture in one place.
Investors can try our My Financial Insight to:
- Get organized by bringing all your financial accounts into one consolidated picture—one location to view your investments, bank accounts, credit cards, mortgages and more.
- Monitor your net worth and easily track changes in your portfolio performance over time.
5. Defend Your Identity
In today’s cyber world, it’s more important than ever to safeguard your personal information.
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Managing finances can be confusing and sometimes even daunting. “As industry professionals, we are committed to helping others create a game plan to reach their financial goals,” says Al Chingren. To help do this, American Century Investments has launched “America’s Financial Coach,” a new radio show designed to help people navigate everyday financial challenges.
1 2015 U.S. News & World Report
The opinions expressed are those of Beth Allwood and Al Chingren and are no guarantee of the future performance of any American Century Investments fund.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.