• Samuel Rad

Financial Planning Tips for 2016

Now that 2016 has arrived it’s a good time to evaluate your financial planning to make sure your portfolio and other financial measures are ready for the challenges of the year ahead and beyond. Below are 8 financial planning tips to keep in mind:

Consider buying insurance: While there can be a tendency to overlook insurance, for many investors, disability and life insurance are important components of an overall financial plan – particularly when it comes to providing peace of mind. The ability to bring in income is crucial to providing for one’s family and oneself and insurance can offer a solution if that ability is interrupted at any point.

Work with a budget: Even individuals who are cautious about their spending can be helped by the discipline instilled by working from a budget. Without a budget, it’s easy to let spur of the moment purchases lure you into spending more than might be prudent. A budget provides an excellent means of calculating how much you are spending on what and adjusting your spending behavior going forward.

Treat yourself with gift cards. Trying to stop yourself from spending money on any of the small things you enjoy in the name of financial prudence can be counterproductive – in the long run, it may make the budgeting process so unpleasant that it becomes hard to stick to it. Instead of eschewing all non-essential purchases, allow yourself to splurge on things you enjoy every now and then – from books to a movie to ice cream to a deluxe latte or whatever it may be – by using gift cards. The ability to prepay for the cards allows you to keep such spending from breaking the budget while still getting the chance to experience the pleasure of buying things you enjoy.

Budget for living on one income. If you’re planning to have a child and wondering if one parent can quit work or reduce their hours when this occurs, draw up a budget to see if this is feasible. Doing so may require that you increase your savings in the year or two leading up to having a child to make it easier for one spouse to scale back on work when the child arrives.

Establish a 529 plan for college savings. These plans allow funds to grow tax deferred if they are subsequently used for a college education. Cash gifts from relatives can also be used to help fund the accounts.

Review your portfolio allocation. Your investment goals and risk tolerance are likely to change over time. As a result, it makes sense to review the investment selections you have made on a regular basis to affirm that they accurately reflect your current circumstances. This allows you to be proactive when it comes to managing your investment portfolio.

Maximize retirement savings for both partners: If one spouse is not working, a spousal IRA can be used to set aside retirement savings for the non-working spouse. Doing so allows you to maximize the number of funds set aside for retirement purposes in any one year.

Make sure beneficiary forms are current. In retirement plans and insurance contracts relating to annuities and life insurance, beneficiary forms take the place of a will or trust when it comes to determining who will inherit assets. As a result, you should ensure that these forms are completed and updated as necessary to reflect any changes that need to be made to them over time.

Review your employer’s benefits plan. Benefits plans sponsored by employers can cover a wide variety of financial issues, from retirement savings to a disability, life and health insurance, and more. As such, it is important that you take the time to review your plan as it relates to overall financial and insurance planning. For instance, if your employer matches 401k contributions, this is important to know as it increases the incentive on your part to participate in the plan.

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Samuel Rad is an award winning fee-based Financial Planner with Affluencer Financial Advisors in Los Angeles, California. Mr. Rad has multiple licenses in the investments, real estate, and insurance fields. He has spent a considerable amount of his career lecturing at universities and companies, on financial topics such as financial planningretirement planning, and estate planning.

He currently lectures at UCLA and West Los Angeles College.