Yesterday’s Wall Street Journal had almost the entire back section devoted to the New Year’s resolutions of well-known people. At this time of the year, most people think about what they might do differently going forward. Thoughts of a new year give us hope that a fresh start will solve many of our problems. It seems like the majority of people focus on their weight or their health. As an alternative, why not get a financial physical for the New Year?

Certainly your financial health is just as important as your physical health. This is particularly true these days, with unemployment so high and the prospect of higher interest rates, inflation and taxes looming in the not-to-distant future.

Spending some time answering the following questions will give you some good insight to your financial health as well as whether or not you could use some professional help. If you can’t answer many of the questions, you need to either start hitting the books or seek out an advisor. Here are some of the most important questions to ask yourself:

(1)What’s your net worth? Add up the value of all your assets and subtract your liabilities (mortgage balance, auto loan balances, credit card debt, etc). The result is your net worth. If it’s negative, you need to take drastic action ASAP.
(2)Do you have an emergency fund invested in liquid assets that equals at least six months of living expenses (six to twelve months is probably better)?
(3)Are you carrying credit card balances forward each month or do you pay off what you’re charged each month?
(4)Are you saving enough for your children’s college education? Do you even know how much they will need?
(5)If you have an advisor, do you know exactly how he or she is compensated?
(6)Do you know how much the fund fees are for the mutual funds you own?
(7)Do you a strategy for investing?
(8)Do you know the extent of your portfolio’s diversification? We believe your investments should be spread over at least eight to ten distinct asset classes. Most people who come to us for help are over-weighted in U.S. stocks.
(9)Are you properly insured? Do you have disability insurance coverage and an umbrella liability policy?
(10)Have you done any estate planning? If you have children, have you planned for a guardian in case you and your spouse are tragically killed in an accident?
(11)Do you know where your money is going? If your miscellaneous expenses are more than 5% of your budget, you need to get a better handle on your spending.
(12)Do you have any idea of how much money you’ll need for retirement? Are you saving enough?

If you found you had trouble answering a number of these questions, you might better skip the New Year’s resolution focused on losing weight or exercising more. Your financial health may be in jeopardy. Make 2011 the year you did something about it!