There can be many layers to the new you in the New Year, both physical and fiscal. According to Donna L. Jordan, CFP and AIF, a principal in Money Professionals, LLC., this is a good time of the year to evaluate your financial game plan and determine whether you need to make changes. Decide what you really want to achieve financially and then structure your lifestyle accordingly. This plan for the New Year should include the following:

1. Increase the amount of money you have allocated to savings goals for the upcoming year. If your employer offers a retirement plan, such as a 401(k), and matches part or all of your contributions, be sure that you are contributing enough to at least take advantage of any employer matching that is available. If you do not have access to a plan at work, contribute to an IRA. At a minimum, 10 percent of what you make should be earmarked for retirement savings. An additional 2 percent to 10 percent should be earmarked for other savings goals, such as a down payment on a home; a new car or other major expenses.

2. Live below your means. You will never get ahead if you spend more than you make. Make a budget to see what you are really spending on your lifestyle. Make necessary changes and then stick with it. This should include a commitment to paying off credit card debt as soon as possible.

3. Review your investments. Be sure to understand every investment you own and why you own it. For example, an investment portfolio with a primary objective of growth would not be appropriate once you are ready to retire. Beware of blindly following advice from financial publications or the “experts’’ on TV or radio when selecting your investments. The fund that was at the top this year could easily be the fund that is on the bottom next year.

4. Review all of your risk management strategies. All insurance coverage should be reviewed annually to make sure you have adequate coverage and that you are purchasing them in the most cost-effective way possible. This includes your property/casualty coverage (homeowners, renters’ coverage, auto, liability, etc.), as well as life insurance, medical insurance, disability insurance and long term care insurance. You should be sure that there are no “gaps’’ in coverage and that you understand what is covered and what is not. Most planners recommend that you hold the equivalent of at least three to six months’ worth of living expenses in a liquid savings vehicle, such as a short term CD, or Money Market Account.

5. Review your tax strategies with your accountant and financial adviser. Be sure you are taking advantage of all available tax favored strategies that may be appropriate for your situation. If you are self employed, you should review your business structure to determine if it best meets your personal and business needs.
6. Review your estate plan with a qualified estate planning attorney and your financial
adviser. This could be as simple as updating your will and your beneficiary designations on your IRAs, retirement plans, life insurance and annuities. Or you may need to consider establishing a trust or other more advanced estate planning techniques. It is important to make sure that your wishes pertaining to your dependents, your friends and/or charities are followed, and that you have taken all steps to minimize the shrinkage that probate and estate taxes can inflict after your death.