Seven Steps to Start 2006 on the Right Financial Foot Presented by Dallas/Ft. Worth Texas Fee-Only Financial Planner/Financial Planning, Steve Blankenship ,CFP

Dallas/Ft. Worth financial planner fee-only CFP, Steve Blankenship of http://www.HeritageFinancialPlanning.com details Seven Steps to Start 2006 on the Right Financial Foot.

Dallas/Ft. Worth, TX (PRWEB) January 2, 2006 -- It seems that every year goes by a little quicker than the year before and 2005 was no different. As we stand at the threshold of a new year, here are seven tips that will help you start the new year right with your personal finances.

Tip #1. Get Energy Efficient. If taking care of Mother Nature wasn't enough incentive to begin with, 2006 presents taxpayers with a multitude of opportunities to write off expenses for becoming more energy efficient. The list of tax breaks is too long to list here but do some investigating to see how you may benefit along with the environment.

Tip #2. Rebalance your Investment Portfolio. The investment performance of certain asset classes may have outpaced the performance of other asset classes and in the end the result may be a portfolio that started out with a 65/35 equity to fixed income ratio but because of market performance now sits at 80/20 equity to fixed income.

Tip #3. Get Ready to Increase your Retirement Plan Contributions. The contribution limit for your retirement plan at work is likely to be increasing as of January 1, 2006. The limit for 401(k) contributions for 2005 was $14,000 for those younger than 50 and $18,000 for those over 50. These limits have increased for 2006 to $15,000 for those younger than 50 and $20,000 for those over 50.

Tip #4. Conduct a Review of your Property and Casualty Insurance with your Agent or Insurance Company. That diamond ring or fur coat that you found under the Christmas tree may need a separate insurance policy or at least need to be listed separately on your homeowner's policy. Double check your auto insurance liability limits to make certain that they are appropriate. If you have a net worth of $1,000,000 for instance, then make sure you have maxed out your auto liability limits. You will likely have a limit of liability coverage on your auto policy that falls short of your net worth. In this case, discuss with your P&C agent adding a personal umbrella liability policy to increase your liability insurance limits to cover your full net worth.

Tip #5. Watch out for Diversification. Even with the lessons of Enron a tremendous number of investors still stash unhealthy allocations of cash in one stock; typically the stock of their employer. With employee stock purchase plans, ESOPs, 401(k) plans that allow investment in or require matching contributions in company stock and stock option plans, there are a multitude of opportunities to tie too many dollars to one company. Diversify, diversify, diversify.

Tip #6. Have your Estate Documents Reviewed. The estate tax law has been revised numerous times in the past five years. Many existing estate documents need to be revised accordingly. Many who read this column do not already have a will or other vital estate planning documents in place. Now is that time to get it done. Documents that should be in place for most everyone include; Last Will and Testament, Durable Power of Attorney, Healthcare Power of Attorney and Directive to Physicians. There may be other documents needed based on your individual situation so consult a professional, but do it soon.

Tip #7. Develop a Spending Plan. Easily one of the most important actions for financial success is to develop a spending plan or a budget. Even for those that have high incomes, proactively planning your expenditures will mean that you have a lot more to show for all your hard work and late nights at the office than those that spend at will.

www.HeritageFinancialPlanning.com

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