Connect @ Home

Your Annual Financial Review

By Shirley Anderson-Porisch

Brief

The New Year brings an opportunity for "resolutions" and many people take that time to review their financial situation. This year, I suggest doing it now, before the end of the year, to give yourself time to make decisions for the present.

Every day, U.S. households, are making the decision to spend money on a variety of things. From financial transactions like purchasing goods and services to saving for lifelong needs, your money becomes prioritized, oftentimes without a second thought.

Financial actions and decisions are always in a state of change. A single parent at age 18 faces a very different set of decisions than does an 18-year-old who is dependent on his or her parents. A household with children spends money very differently than a household without children. A household with two retired adults makes decisions based on the long-term liquidity of retirement income.

Is there a right or wrong way to make these financial decisions? Is there a right way or wrong way to spend our money?

Rather than identify actions and decisions with money as right or wrong, consider what you have chosen to allocate your money. Some financial choices are better than others and based on that experience and careful thought we are able to make the best choices.

For your annual financial review, here are 10 suggested questions to ask yourself for making sound decisions with your money. These are money management principles on which you can base short and long-term decision-making.

Ask yourself:

1. Do I have a monthly plan for saving and spending?

2. Do I have bank accounts (checking, savings, etc.) for handling money?

3. Do I spend less than 20% of net monthly income on consumer debt (does not include mortgage payment)?

4. Do I review my credit report annually?

5. Do I have short and long term savings goals including an emergency fund and retirement fund beyond social security?

6. Do I have income protection in the event of disability or death?

7. Do I have adequate insurance coverage for auto, property, health and life?

8. Do I utilize strategies for savings on income tax?

9. Do I have an updated will and health care directive?

10. Do I know whom to contact for information on each of these financial actions?

There are no right or wrong answers. Perhaps a "no" answer will motivate you to take future action.

Don't wait until the New Year to review your financial decisions. Starting today can help you make the best financial decisions in 2009.

Shirley Anderson-Porisch works as a family resource management Extension educator at the University of Minnesota and is an expert in family finance. She has long been a media contributor and is an accredited financial counselor.

Newswire