For many, New Year’s is a time to look to the future and start fresh. It’s a time to set goals and chart a new course. You may be looking at your family’s finances as one area where you can implement new habits and strategies. Perhaps you’ve fallen behind on your savings or feel that you may be too exposed to risk. The new year might be the right time to analyze your current situation and make changes.
The good news is there are many steps you can take to strengthen your family’s financial picture that are relatively simple. Below are five such steps. Use the new year as a time to reflect on your current financial picture and take action to make improvements. If you haven’t undertaken the following steps, now may be the time to do so.
Increase your retirement contributions.
Your 401(k) can be a powerful retirement savings vehicle. It offers tax-deferred growth, which means you don’t pay taxes on your gains as long as the funds stay in the account. This could help your money grow at a faster rate than it would in a taxable account.
Also, your employer may offer matching contributions. For example, some employers will match their employees’ 401(k) contributions dollar-for-dollar up to a certain threshold, such as 3 percent of salary. These matching dollars are a great way to increase your savings level.
You can also increase your savings rate by simply bumping up your contribution percentage at the start of each year. Consider raising your rate by 1 percentage point. If you do this each year, you can significantly increase your potential gains without busting your budget.
Analyze your debt.
Debt is a fact of life for many Americans. You may use debt to pay for your home, car, education and more. But do you really know how much you’re paying to service debt? And do you know how much of your payments are going toward interest?
If not, take time at the beginning of the year to add up your monthly debt payments. Take special notice of credit card payments. Also, take a look at the interest rate on your various types of debt. If debt is consuming a large portion of your budget, 2018 may be the year to get serious about eliminating it.
Consolidate your retirement accounts.
Did you leave your 401(k) behind at your last job? Do you have multiple IRAs that you’ve opened over the years? It’s not unusual for people to have several different accounts with retirement assets. However, it’s often helpful to consolidate those accounts into one IRA.
Obtain statements for all your retirement accounts and see what you can consolidate. You likely can’t do anything with your 401(k) for your existing employer, and you can’t mix pretax dollars with post-tax accounts like Roth IRAs. However, you can consolidate traditional IRAs and 401(k) balances from former employers. By doing so, you may be able to implement and better manage an investment strategy that is aligned with your goals.
Review your insurance.
Finally, make sure your family is fully protected in the event that you die or become disabled. This is especially important if you are the breadwinner of the family. If you pass away, would your family have enough assets to maintain their standard of living? What if you became unable to work because of disability? Insurance can help fund that gap. Work with your financial professional to determine whether your coverage is adequate.
Ready to stabilize your financial future? Let’s talk about it. Contact us today at Thomas Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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