It's 2012; Now What?

Tips for getting started

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Roger Wohlner

The 2011 holiday season is behind us. Many of us made new year’s resolutions; many of these likely involve our finances. The new year is upon us; where do we start? Here are some suggestions.

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Review and organize your investment accounts. Statements should start coming out now. Open them and go through all of your accounts and review your overall holdings as a portfolio, not just a collection of accounts and holdings. I generally set up a spreadsheet for each of my clients with their accounts across the top and their holdings down the left side, organized by asset class. By this I mean large caps, small- and mid-caps, international, fixed income, etc. This allows the client and I to get a sense of portfolio distribution. Ideally, if you have a financial plan, or at least a written investment policy, in place you can compare your allocation and rebalance as needed.  Regardless, looking at all of your accounts (retirement plans, IRAs, brokerage accounts, etc.) as an overall portfolio can be an eye-opening experience if you’ve never done this before.

Review your current financial situation against your financial plan. Assuming that you have a financial plan in place, the beginning of the year is a great time to review your progress against various milestones, such as saving for retirement or college. Are you saving enough? Are beneficiary designations on company retirement plan accounts, IRAs, annuities, and insurance policies up to date and correct? Did you experience a life change in 2011 such as marriage, divorce, or the birth or adoption of a child that would necessitate a change in your estate planning documents? If you are working with a financial adviser, this is a great time to sit down with him or her to review your situation.

If you don’t have one, get a financial plan in place. Whether you do it yourself or hire a professional, this is worth your time and money. A recent report by HSBC revealed the following:

Americans with a financial plan have accumulated on average $127,000 in retirement savings vs. $56,000 for the average U.S. household. Non-planners have an average of around $23,000 saved.

Almost 44% of those without a plan associate retirement with financial hardship, while this number is only 19% for those with a plan.

Hire a competent financial professional if you need one. Was 2011 the year that you were going to focus on your finances? How did that turn out? The truth of the matter is that many folks are capable of handling their finances but lack the time to devote to it. For others, this is simply not their thing. If you need help, go find a financial adviser. There are many choices. Some work hourly as needed, others work on a project basis, and still others will work with you on an ongoing basis. Before embarking on this route, give some thought as to what you are seeking from a relationship with an adviser.  Meet with several candidates and ask questions.

Make 2012 the year that you take charge of your finances. Years from now, you and your family will be glad that you did.

Roger Wohlner, CFP®, is a fee-only financial adviser at Asset Strategy Consultants based in Arlington Heights, Ill., where he provides advice to individual clients, retirement plan sponsors, foundations, and endowments. He recently cofounded Retirement Fiduciary Advisors to provide direct investment and retirement planning advice to 401(k) plan participants. Follow Roger on Twitter and LinkedIn. Roger also blogs at Chicago Financial Planner.