5 financial fitness habits to begin in the new year

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(BPT) – While many people focus on personal health goals in the new year, the beginning of the year is also a great time to check your financial fitness. So how can you whip your finances into shape?

South University College of Business, Virginia Beach faculty member Dr. Alan Harper says everyone should adopt these five financial habits in 2015:

Establish a budget

Harper says the first step in taking control of your finances is to establish a budget. “It is extremely important to know how much money is coming in, where it’s going, and allocating it appropriately,” he says. “Having a budget allows you to gain a broader understanding of your spending habits.”

Make sure your budget includes allowances for food, clothing, gas, and even entertainment, Harper advises.

Start saving

Your budget should also include money set aside for emergencies. Harper says the old rule-of-thumb that three month’s salary is enough to have in your bank account no longer applies in our current economy.

“We found in the last recession that people who lost their jobs tended to stay out of work much longer than three months,” he says. “You should have six months to a year’s worth of income in savings, just in case.”

Harper says you should also try to put away 15 percent of your take-home income toward your retirement. Many retirement savings options are available, including 401(k)s, Roth IRAs and individual retirement accounts. It is important to do your homework before deciding on a long-term investment strategy so that you are aware of terms, conditions and any fees associated with your options.

Manage your credit

The beginning of the year is a perfect time to check your credit history, and to look for any mistakes on your credit report, Harper advises. Mistakes on your credit report can cost you large sums of money in interest rates, or even keep you from being approved for a loan.

“The law requires the three major credit reporting agencies to provide you with one free credit report a year,” Harper says. “Pull those reports and look for discrepancies. If you find one, file a dispute with the credit reporting agency and they will remove the item if it is incorrect.”

Harper also says to check your FICO score on the report, make sure you have an understanding of what the score means, and how to improve it if the score is low.

Shop smart

Make it a priority to save money while you shop, Harper says. He encourages clipping coupons, and says purchasing membership cards to discount stores like Sam’s Club and Costco can help you save money over time.

“Those stores will save you money in the long run on purchases like food, gas, and even personal care items.”

Check your insurance

Setting aside time at the beginning of the year to check your insurance policies can also save you money. Harper advises that you should review your auto, home and life insurance to make sure you have the proper coverage.

“You want to make sure you aren’t paying for coverage that you may no longer need, but you also want to make sure you have adequate coverage in case there is an accident or you need to make a claim,” he says.

Many companies also offer discounted rates if you hold multiple policies with them. So, if your auto, home and life insurance policies are with different companies, you may want to explore the benefits of choosing just one company.

“It’s also important to make sure your life insurance policies are sufficient to protect your family from a financial crisis in the event that something happens to you,” Harper notes.

“Establishing a budget, saving, staying on top of credit and insurance, and shopping smart all take some work,” Harper points out. “But the rewards to your personal and household bottom line are well worth the effort.”

5 Vital questions to ask your financial advisor

5 vital questions to ask your financial professional

(BPT) – When was the last time you met with a financial professional? Would you be more likely to keep those appointments if you knew some specific questions to ask? These meetings provide an important opportunity for you to ensure your strategy is still on track and ensure your family and finances are protected. You can get the most out of your meeting by asking the right questions.

Whether it’s your first meeting or your 20th, Thrivent Financial suggests you consider asking these questions when meeting with a financial professional:

1. Is my coverage adequate?

Ensuring proper financial protection against death, disability or injury is one of the most important things you can do for your family. Talk to your financial professional about cost concerns, protection options and how you can make sure that your family will be covered financially in the event of an untimely death or disability. If you’ve experienced major life changes like the birth or adoption of a child, purchased a house or gotten married, chances are your protection will need updating.

2. What are some creative ways we can refine my strategy to help maximize benefits?

A financial professional can help you organize your financial strategy in a way that factors in things like taxes and market volatility, and he or she will know what changes are on the horizon that could affect you. A financial professional can also help use primary products, like life insurance, in unique ways – like helping supplement a retirement income stream. These are applications many don’t know about but can offer different advantages to your financial strategy.

3. How are my financial strategies aligning with my values?

Having a financial strategy that allows you to align your finances with your values is another important topic to bring up. If you have charitable causes you want to support, or volunteer trips you want to take, make sure your financial professional knows about them. He or she can help you develop ways to bring your generosity to life.

4. Tell me about the strength and stability of your company or organization.

Insurance is only as strong as the ability of your financial institution to pay out claims when you need to claim a contract. Make sure to investigate the strength and stability of any company you’re working with to ensure it is financially sound enough to make good on its obligations.

5. What should I do differently in the next year?

This seems like an easy question, but you’d be amazed how few people ask it. Your financial professional is often in a unique position to help you stay ahead of the curve when it comes to your future strategy needs. Taking advantage of market volatility and ensuring your future protection needs are just two of the many variables to consider. Yearly meetings with a financial professional can help you hone your financial strategies for the upcoming year and help keep them as healthy as possible.

Your time is valuable, and your financial future is even more valuable to you and your family. Make sure you’re maximizing both and ensure you get the most out of meeting with your financial professional.