The new year is an excellent time for your annual checkup — a business and personal accounting checkup.
Diagnostics on your financial health in both areas of life will help you make economic lifestyle decisions meant to help keep you in the black.
Do you need a health savings account for health care costs or a dependent care flexible savings account for such expenses as child or adult day care, preschool, before- and after-school programs, and other eligible needs? Review your 2019 expenses for health care or dependent needs and consider setting up a payroll deduction either personally or through employer-provided options, depending on your preference.
Insurance is another exam area. The more things you have, the more things you have to insure. Business insurance ramifications extend to new locations; renovating or reconfiguring your existing site; adding inventory, services or new employees; vehicles; downsizing; contracts with customers; vendors; lawsuits; and more.
On the personal side, the same need for examination holds true for homeowners, health, auto and life insurance, and associated umbrella policies. For example, as we age, if we’ve put aside enough money for retirement our life insurance needs may diminish or disappear. Examine your needs to ensure they’re consistent with what you’ve bought.
Another item on the financial checkup is if you have a will, a living will and a durable power of attorney. Each has its own importance.
For the roughly half of Americans over age 55 who don’t have a will, a new year’s recommendation is to prepare a will and conduct general estate planning.
The website caring.com shares statistics that are consistent with other sources: “According to Caring.com’s 2019 survey, 57 percent of U.S. adults do not currently have estate planning documents such as a will or living trust.”
Wills can cost next to nothing: You can write your own and have it notarized. However, depending on your personal financial complexity, writing your own will can create more problems than it solves. Attorney-written wills can range from more than $100 up to thousands. The more pertinent question is: How much will it cost to not have one?
The people affected if you don’t have a will, a durable power of attorney (for decisions if you are incapacitated) or a living will (to make your care wishes known) are partners, employees or family members who must sort out what you left unknown or undecided.
Another area: subscription services. There are subscription services for just about everything: Amazon, Netflix, Hulu, magazines and newspapers, wines, car washes and even having your home cleaned. These feel like great things when you’re signing up, especially for that recent Christmas special that seemed so appealing. But what are they costing you, and are you using them enough to justify the expense?
Many considerations, such as the ones listed here, are general. Others are exclusive to individuals. In whatever case, work with an accounting or finance professional who can ask the right questions and give you a first-rate financial health checkup.
This article first appeared in KnoxNews.