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Jim Lentini: Planning your New Year’s financial resolutions

Posted: February 8, 2010 10:12 p.m.
Updated: February 9, 2010 4:55 a.m.
 
At the beginning of the New Year, it is a time when millions of us turn his or her best intentions into New Year’s resolutions.

If you are in the habit of doing this, have you made your “financial resolutions” for the New Year?

If so, here are some resolutions that could give you a head start on your financial goals in the year ahead:

* Review your asset allocation. After two years of market volatility, the asset allocation plan that you put in place for the long term may have slipped off target.

A strategy to bring your allocation back in line with your goals and risk tolerance should be discussed with your financial advisor.

* Confirm your risk tolerance. Too many Americans suffer during a bear market by exiting because there is a mismatch with their portfolio and risk tolerance.

It is best to periodically to meet with your advisor and evaluate your current situation, lifestyle changes and adjust portfolio allocations so that you stay comfortable in both rising and falling markets.

* Increase retirement savings. When markets have dealt you a setback, you may want to increase monthly investing into your pension or 401k plan. This way, you are buying more shares at a lower price.

If you are investing for the long term, this can prove beneficial if structured properly.

* Credit card debt. One of the easiest ways to free up more cash for investing is to get rid of credit card debt. This will not only save you from very high interest loans and reduce long-term burden, it will give you more monthly savings by “paying yourself first before paying everyone else.”

* Build an emergency fund. Basic financial planning always starts with having three to six months of living expenses in a savings account. This way you don’t have to turn to high-interest credit cards or your retirement savings when unexpected needs arise.

So, in planning your New Year’s resolutions, you may want to consider some of these financial options that can help you relax and have more fun in the New Year.

Even if you only tackle one or two of these resolutions, it can make a difference in your financial future. With all the problems happening in Sacramento and Washington, D.C., that affect our taxes and savings, we need to have good personal planning.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments, Inc. His column reflects his own views and not necessarily those of The Signal.

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