A new year, and a new you. At least, that's the hope. Often we pick out New Year's Resolutions about losing weight, eating better, or making better financial decisions. It isn't necessary to wait until the new year to start working on those goals, but it's as good a starting point as any.
As you work to start off the new year, and the new decade, on the right foot, now is a good time to take care of some financial housekeeping and set your sights on your financial future. Here are some money moves that will help you find success in the new year and beyond:
1. Review your spending in 2019 and set a budget for 2020
First, find out how you did in 2019. Did you spend less than you earned? Are you saving enough for your financial goals (eliminating debt, vacation, home down payment, new car, etc.)? Whether you fell behind or stayed within budget, you need to build a new one for the new year. If you’re not using a budgeting app, a simple way to review your finances is to look through your online bank statements. Take a look at where your money went and find areas where you could reduce or eliminate costs. Then set budget limits in each respective category for the new year (shopping, dining, entertainment, etc.). Just remember to pay yourself first; i.e., save.
2. Take advantage of higher retirement account contribution limits
The annual maximum amount you can save in 401(k), 403(b) and most 457 plans increases from $19,000 in 2019 to $19,500 in 2020. Catch-up contributions (the extra amount people age 50 or older can save) are also set to rise, from $6,000 in 2019 to $6,500 in 2020. It’s better to start planning for how to save a little more each month at the beginning of the year than trying to save a lot more at the end. Just setting aside an additional 1-2% each month can make a big difference and help you reduce your taxable income.
3. Evaluate the investments in your accounts
The type of investments you own in your 401(k) or other retirement account can be just as important as how much you save. You want to make sure your asset allocation – the mix of stocks, bonds and cash – aligns with your goals. In other words, it can generate enough growth to achieve your goals and you’re comfortable sticking with it for potentially many years. Also, make sure you are not paying more in investment costs than you have to. The less you pay in fees, the more of your return you get to keep.
4. Meet with a financial adviser to make sure you’re on track toward retirement and to implement any specific personal financial steps
If you need help with your finances or want to be more confident in your financial future – this includes most people – then work with a professional financial adviser. There are a variety of financial professionals out there who can help people of all levels of income and need. Nothing should prevent you from getting useful financial advice. It can be hard to find information that relates to your specific financial situation, so work with a professional who can review your entire financial picture and recommend personalized steps.
You can also visit the website for Advance Capital Management to learn more.
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