Dollars & Sense
Everyone knows its important to get your oil changed regularly and to keep your tires properly inflated, but have you thought about performing the same kinds of maintenance on your finances? Because of constant changes in market and economic conditions and in your own life, its a good idea to review some key financial issues regularly to be sure they are up to date.
Have you got the right insurance?
Insurance policies can give you peace of mind, but that doesnt mean you should set them aside and forget them. If you have had children since you bought your life insurance policy, seen a rise in your income level or experienced some other important change in your life or your finances, you may want to adjust your coverage accordingly. If you have gotten married or divorced, for example, it may be time to change your beneficiary. You should also consider whether there are reasons to raise the deductibles on your home or auto insurance (if you want to lower your premiums) or lower them (if you prefer less out-of-pocket risk in case of an accident). And if youve always felt that you were paying too much for insurance, it cant hurt to do some research every couple of years to see if a less expensive option would suit you just as well.
Are your investments on track?
Even if youre happy with investments you made in the past, its smart to review them regularly to ensure that they still match your objectives and that the related risks and rewards continue to fit your current situation. The growth-oriented stocks or stock market mutual funds you started buying in your 30s, for example, may not completely suit your needs as you get closer to retirement. In addition, many people allocate a percentage of their investments in certain types of investments, but those percentages may change due to gains and losses in different markets. Thats another reason to review your holdings and decide whether changes are necessary.
Is your will up to date?
Does your will take into account recent changes in your life, such as marriage, divorce or other passages in your own or even in your childrens lives? Do your loved ones know where to find important documents (including your will and information about your bank accounts, investments, etc.) if something happens to you? If not, nows the time to create a current will and make sure that it and other key papers are accessible to loved ones.
Can you renegotiate some payments?
Most people pay a long list of bills every month. Whats the best way to reduce your payments on all those bills? Sometimes all you need to do is ask. Many companies are scrambling to keep customers, so they may be very open to renegotiating rates. That includes the companies that supply your cable, cell phone service or your landline, as well as those that provide your Internet service and a host of others.
Can you reduce credit costs?
While youre renegotiating deals, dont forget your credit card company. If you have a good payment history, call the company and suggest they lower the interest you pay. If they refuse, make it clear that you plan to look for a better rate elsewhere. That shouldnt be an empty threat: Its always a good idea to keep an eye out for better credit card deals. As part of this process, use the American Institute of CPAs 360 Degrees of Financial Literacy Credit Card Optimizer to decide the best distribution of your credit card debt. And remember that a good credit score will help you qualify for the lowest borrowing rates.
Dollars and Sense is a monthly column provided by the Oregon Society of CPAs