Getting Off On the Right Financial Foot for 2016

Here’s what I tell my clients to do at the start of each year. Consider it an eight-step plan for your financial well-being.

So this is going to be THE year. The year that you turn it all around. The year you lose weight. The year you start saving for retirement. The year you start budgeting. I’ve received about two dozen emails in the last week telling me how to make 2016 a great year. However, no list is going to motivate me to get something done; only making myself get it done will make it happen.

As soon as you are done reading this article, open your calendar and block off one hour next week where you go to a coffee shop with only a notepad and pen. Don’t let anything deter you from your appointment with yourself. Label the appointment "My 2016 Financial Goal Meeting." This meeting is to brainstorm and organize what you are going to improve in 2016 and how you are going to get there.

Here are a few areas you might want to consider:

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1) Give yourself a raise: Call human resources or log in to your retirement plan, and increase your contribution by at least 1%. Some plans offer automatic annual contribution increases. If your plan offers automatic savings increases, be sure to choose this option.

2) Evaluate your investment options: Whether you manage them yourself or someone manages them for you, be sure you know your investments. Start with identifying the fees you pay an adviser, then identify the fees you are paying internally for the investment and, finally, make sure your investment is performing up to par. If there are any red flags, it might be time to make a move. Check (opens in new tab) to get unbiased information on your investments.

3) Diversify: Be sure your investments are spread across all major asset classes. Once you complete that task, check to see if there is an annual rebalancing feature available on the account. This will keep the portfolio in balance as the years pass. Remember 90% of your returns are determined by asset allocation. A good resource for determining your asset allocation is (opens in new tab).

4) Check your credit report: With all the data breaches and theft of Social Security numbers, it is important to keep an eye on your credit. Federal law requires each of the three nationwide consumer credit reporting companies -- Equifax, Experian and TransUnion -- to give you a free credit report every 12 months if you ask for it. To get the (truly) free credit report, go to (opens in new tab).

5) Update your beneficiaries: Birth of a child, death, marriage, divorce, etc. These are just of the few life changes that may require a change of beneficiary. Be sure to check your retirement plan, life insurance, annuities, etc.

6) Make a budget (or try): This is the most daunting task for clients. If you have yet to budget, I recommend just tracking your expenses for one month. Being aware sometimes is more effective then creating a budget. Try (opens in new tab) for a free expense tracker.

7) Reduce expenses: Find one item you can cut out, and stop it for one month. Also, shop annually for reduced health insurance, homeowner’s insurance, auto insurance, cable, phone, lower interest rates on loans, etc.

8) Plan a vacation: Life is about balance, and, if you do plan to make some changes, be sure to include some fun and relaxing time. Plan it.

Once you have identified your goals, schedule them in your calendar. Spread them throughout the first three months. Take the time to improve throughout the year. If you fail, try again. Make your goals attainable. Be specific. The most common mistake I see my clients make: They make their goals too vague. Make your goals as specific as you can. Don’t say, “I’m going to save more money this year.” Instead say, “I am going to save $100 more per week this year.” Lastly, make it real. Find someone you trust and respect, and share the goal with them.

Rob is an independent registered investment advisor in East Greenwich, Rhode Island. Rob combines his financial knowledge base with his unique ability to match clients' emotions and goals to their balance sheets. He grew up with two teachers as parents and believes that clients need to understand to succeed.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Robert N. Auclair, CFP®
Principal, Balanced Wealth Management, LLC

Rob is a member of the Rhode Island and national chapters of the Financial Planning Association and the Rhode Island Estate Planning Council. Rob received the 5 Star Wealth Manager award in 2014. Rob was a regular guest for the past four years as the Financial Planning Pro on FOX Providence's The Money Pros. He continues to provide advice on 630 WPRO and ABC6 in Providence.