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Five Tips for Getting Your Financial House in Order for the New Year

by Landon W. Buzzerd, CFP®

January 31, 2025



As we move into the New Year, many households establish resolutions often related to health and wealth. Given our expertise at Grant Street, we have compiled a list of the top five items to address within your household finances, along with actionable next steps.  We wish you all a happy and healthy 2025.  Cheers to achieving your wealth-building goals in the new year! 

 

1.      Address Outstanding Account Administration Tasks

 

It is important to maintain accurate information related to your accounts as life events occur. If you moved to a new home, you will need to update your address. If you are recently married or divorced, you will want to update your name associated with your accounts.

 

You should also review the registration of your accounts. It may be beneficial to retitle an individual account to a joint account with your new spouse or add a transfer-on-death (TOD) designation. These methods will facilitate an efficient transfer of assets upon your passing. Your retirement accounts allow for beneficiary designations, so it’s a good idea to periodically review the designated beneficiaries and confirm that the structure still matches your wishes.

 

Lastly, it is prudent to add security protections to your accounts such as enabling two-factor authentication or ensuring that you have not used the same password across multiple accounts.

 

2.      Review Your Household Balance Sheet

 

As your wealth picture grows, it is vital to track your progress to ensure you are headed in the right direction. Preparing a household balance sheet on an annual basis that details your assets (what you own) and your liabilities (what you owe) will provide insight to your wealth building journey.

 

Listing out your various accounts and understanding the different tax treatment within them helps to identify which account is the most efficient to access for cash flow needs You may also identify ways to consolidate accounts like transferring a 401(k) plan from a previous employer into an existing IRA.

 

Lastly, keep an eye on your outstanding debt and the associated interest rate. In some cases, it may be beneficial to pay down debt as quickly as possible. In others, especially at a low interest rate, it makes sense to invest any surplus cash flow rather than pay additional towards the loan.

 

3.      Implement Savings Strategies for 2025

 

Revisit your current savings strategies across your various accounts. The last two years have provided excellent equity returns, which may have increased the amount of stock in your accounts. It may be prudent to rebalance your investments back to an allocation that aligns with your risk tolerance.

 

If you will be contributing to an employer provided retirement plan in 2025, be aware of the increased employee contribution limits and additional catch-up contributions for those age 50 and older. You may also have the option to select if you would like your contributions to be pre-tax or Roth. When contemplating between pre-tax or Roth contributions, consider your current tax bracket and your estimated tax bracket in your retirement years.

 

If you have been accumulating cash in your bank account beyond six months of emergency savings, consider investing that cash to earn a rate of return greater than your current bank account’s rate. This is also a prime opportunity to establish an automated investment routine into other accounts (IRA, brokerage, HSA, etc.) to avoid accumulating more cash that necessary that is being eroded by inflation.

 

4.      Review Insurance Coverage

 

As your life circumstance change (new job, growing family, additional property, etc.) your policies will need to be updated accordingly. Take inventory of current insurance policies to ensure you have adequate coverage on your automobiles, home, and yourself.

 

Review your home and auto policies and be sure to understand the policy limits.  Make note of circumstances that could be detrimental to your long-term wealth picture or identify areas where you may be underinsured. To lower your premium, check for discounts that you may be eligible for, or increase your deductible if you are comfortable with potentially larger out-of-pocket costs.

 

If you have an existing life insurance policy, ensure it will remain in effect for as long as you need the coverage. For example, if you bought a term policy, refresh yourself on when the term expires and determine if you will need coverage beyond that term. When determining an appropriate amount of coverage, take some time to review your household balance sheet. This will provide insight on the assets that will be available for your loved ones and allow you to identify any shortfalls that need to be addressed through increased insurance. 

 

5.      Revisit and Revise Estate Plans

 

Last but certainly not least, estate planning. This may be the most crucial subject to address in the New Year. If you are no longer able to make decisions regarding your health care or your assets, whether that is due to incapacitation or death, your wishes are in no way guaranteed to be fulfilled if you do not have a valid estate plan in place.

 

Start with the basic documents:  healthcare and financial power of attorney, advanced medical directives, and a last will and testament. If you have accumulated significant assets and would like to place restrictions on those assets for your heirs, various trusts could be beneficial as well. If you have an existing estate plan, review your beneficiaries as well as the executor or trustee who will be responsible for carrying out your wishes. Adjustments may be warranted if your relationships and wishes have changed since the initial estate plan was created.

 

An overlooked segment of estate planning is password and document storage. Chances are you have dozens of online logins for various accounts and your passwords are saved on a piece of paper in a desk drawer. A password management software, which is far more secure than a piece of paper, can help to consolidate your login information in one central location.  You may also want to consider implementing a secure document storage program for your digital files. Keeping important files in a secure place where your spouse and the executor of your will can locate them will help to reduce their stress in an often emotional and confusing time of need.

 

Conclusion: If these New Year tasks seem daunting, consider working with an experienced fiduciary like Grant Street Asset Management. Throughout our relationship, our team of advisors will address each of these areas in great detail and strategize with you to determine an appropriate course of action. Start the New Year off right by prioritizing your household’s financial health.  Partner with Grant Street to develop a strategy that will provide you with confidence in your wealth-building journey. 

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