$ on a chess boardFrom your health to your wealth, New Year’s resolutions can help jump-start your game plan for 2014. While a recent CBS News poll suggests only half of those Americans who make New Year’s resolutions actually follow through, a formal process for prioritizing and establishing goals can help improve your chances of accomplishing them.

As you review the areas of your financial picture that you would like to enhance, consider adding the following money moves to your resolution list:

Improve your financial awareness

Do you know approximately how much you are spending each month and have you completed an updated budget? What percentage of your income are you saving? How much are you paying toward debt and what are you being charged in interest costs? Unfortunately, many people are simply unaware of where they stand financially. Begin the New Year by accounting for all of your assets, liabilities and expenses. Consider building a budget, reviewing life and disability insurance and requesting an updated credit report. Remember, before developing a plan for where you want to be, it is important to have an awareness of where you currently are.

Rebalance your portfolio

Fiscal cliffs, debt ceilings, government shutdowns and fears over the end of Federal Reserve stimulus were no match for stocks in 2013. In fact, despite all of the above concerns, stock performance was quite strong. Considering the significant move in the value of the market as measured by the S&P 500, now may be a good time for investors to review their portfolio to ensure they are still properly allocated.

If you are like most savers, it has been awhile since you last reviewed and rebalanced your portfolio. As a tool that may prove effective in helping to manage risk, rebalancing may help bring the various investments that make up your portfolio back into proper alignment. Remember, all investing involves risk and rebalancing does not eliminate volatility.

When determining your rebalancing strategy, also be cognizant of transaction fees and taxes. Keep in mind that capital gains or losses will be realized in nonretirement accounts, so speak to your tax advisor prior to making any adjustments.

Review your bond investments

2013 was a difficult year for many bond investments and 2014 may not be much better. That is because bond values generally have an inverse relationship to interest rates. Since the yield on the 10-year government bond has been steadily increasing after reaching its low of 1.38 percent in 2011, bonds have been facing some headwinds.

While bonds have struggled, it doesn't necessarily mean that investors should be piling into equities. Remember, stocks are not a substitute for bonds or cash and investors need to carefully review their tolerance for risk. However, there are strategies that may help to reduce the sensitivity of your bond portfolio to interest-rate increases.

One strategy that you may want to consider is reducing the duration of your bond portfolio. Consider reviewing your portfolio on Morningstar.com to determine the duration of your current holdings to confirm that you are properly allocated based upon your specific goals.

Adjust your tax withholdings

According to the IRS, the average taxpayer received a tax return of $2,700 in 2013. Keep in mind that a tax return is simply the IRS returning extra money withheld for taxes that wasn’t necessary. While many taxpayers prefer the forced savings a tax return offers, adjusting your withholdings can increase your cash flow each month. If you could use the additional cash flow to meet other financial goals, consider speaking to your tax advisor to adjust your W4 with your employer. However, be careful not to withhold too little as it may lead to owing the IRS money in April — something most taxpayers do not want.

Review your estate planning

Estate planning is often viewed as being necessary only for those with significant wealth. However, this couldn’t be farther from the truth. From addressing how assets should be passed to heirs and guardianship of minor children to decisions related to financial and health-care matters if someone is incapacitated, addressing estate planning topics is a critical component of any financial game plan. While there are many tools that may be used to accomplish estate planning objectives, the development of a basic will, durable power of attorney and advanced health-care directive are often used as the foundation for many plans. Additionally, consider reviewing all beneficiary designations for retirement and nonretirement investment and bank accounts to ensure they are up-to-date.

Developing financial resolutions for the new year can help ensure that you are making progress toward your goals. Since everyone’s circumstance is unique, consider speaking to your tax, legal and financial adviser to determine the most appropriate approach for you.


Kurt J. Rossi, MBA, is a Certified Financial Planner practitioner and wealth adviser. He can be reached for questions at (732) 280-7550, kurt.rossi@Independentwm.com or www.Independentwm.com. LPL Financial Member FINRA/SIPC.