FINANCE MONEY FINANCIAL CHECKUP

Now that the holidays are behind us, it is time to break out our New Year’s resolutions. There is one staple that has to be on most of our lists... diet. After a wonderful season of delicious, impossible-to-say-no-to desserts, it is time to renew our gym memberships, get back into fighting shape, and schedule our annual physical with our doctor. While getting back into shape and getting a physical can improve our longevity of life, a good financial checkup can really make a difference in helping to improve our quality of life.

The first step should be to assess our financial goals and priorities. These definitely change as we go through life and really are the basis for how we spend our money today and in the future. Whether it be a new child or grandchild you want to help with education expenses or just a desire to retire a little bit earlier than previously planned, it is good to start with the big picture before getting into the details.

Once you have examined your direction by updating your goals, it is time to take a snapshot of how you ended the year by developing your personal financial statement. This is a detailed cataloging of your assets and liabilities as of the end of the year that will help you recognize your progress. Once you have this complete, you can update your budget and analyze your previous year’s cash flows to see where your money was spent. This is a great time to make adjustments for the upcoming year.

Next, it is time to dust off your older insurance policies, and give them a thorough review. It is a good idea to have a financial professional review the policy with you and explain the benefits, as well as any limitations. Over the last few years, insurance carriers have redesigned their insurance products to be more competitive in the market and also provide additional benefits to meet client needs.

One of the most commonly overlooked items is a beneficiary review on all your accounts and policies. Believe it or not, it is not uncommon for an ex-spouse to be left on an old IRA, life insurance policy, or bank account. Divorce is just one of many reasons a beneficiary might change, so a periodic review is an excellent way to help ensure your money goes where you want it to when you pass on.

Along the same lines, estate planning is a critical review item. It has two basic goals. First, it helps enable you to pass your assets on according to your wishes, not the courts. Second, it allows the transfer to take place with the least amount of money lost to taxes and probate costs. A good estate planning attorney is important for everyone so the first goal is met. But for families with larger estates, there can be enormous tax savings by seeking to maximize estate exemptions and deductions.

All of us fall victim to our busy schedules. Making time for a financial checkup seems like it often ends up last on the list. The truth is that just like a physical, if you keep putting it off, it might be too late. Knowing your financial affairs are in order and having a plan in place is the key to getting a good night’s sleep, which will come in handy for your new early morning workouts.

The information provided is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all in vestors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you in vest. Individuals should consult with their tax/legal advisors before making any tax/legal-related investment decisions as Morgan Stanley and its Financial Advisors do not provide tax/legal advice. The views expressed herein a re those of the speaker and may not necessarily refl ect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affi liates.

Chris Bridges is a fi nancial advisor with the Morgan Stanley Wealth Management