Each January, many of us set lofty goals to lose weight, exercise more, kick bad habits, or spend more quality time with our loved ones. Another important area to put some focus on is your finances. Here are 10 tips to consider as you ring in 2020 with aspirations to improve not only your health, but also your wealth.
- Set your goals. Discuss what’s important to accomplish in the next year – saving for a trip; paying off debts; increasing your retirement contributions. Then break those goals down into smaller, actionable steps, making them easier to attain.
- Track all your expenses. Keep track of every expense to truly get a picture of what your spending habits are. It’s often shocking just how much money we really spend. After several months, review to see what recurring expenses could be reduced or eliminated.
- Stick to a monthly budget. Set a budget to keep yourself accountable. By following a written budget, you will increase your chances of achieving your financial goals.
- Pay down your debt. Make this one of your goals. Prioritize which debts to reduce and in which order, reducing or eliminating those with higher interest rates first.
- Set aside an emergency fund. Amounts vary for emergency funds, but generally should consist of 6 months of expenses for single-income households and 3 months of expenses for dual-income households.
- Increase 401(k) contributions. 401(k) contribution limits increased to $19,500 in 2020. If you are not maxing out contributions, consider increasing the percentage or dollar amount contributed each pay period. If you are 50 or older, you can contribute an additional $6,500 catch-up.
- Review your accounts. Set up a review of your accounts with your financial professional. You may need to rebalance investments based upon your risk tolerance, or your goals may have changed from the last time you met.
- Advance your career. Learn a new skill, sign up for continuing education classes, or seek new job opportunities. These may result in increased income down the road.
- Get your estate plans in order. To ensure your wishes are carried out upon your death, make sure you have an estate plan in place. Prepare the necessary legal documents to take care of guardianship and handling of all your accounts and assets. Keep your accounts, policies, and legal documents in one, secure place for your loved ones to access.
- Create a financial plan. Once you’ve established your financial goals, meet with a financial planner to create a long-term plan. They can project how your plans look 10-, 20-, or 30+ years down the road. This helps answer those questions like: am I on track to retire at a certain age; how much retirement income can I expect; will I run out of money?
Hovis & Associates is here to help. We have financial professionals to assist you from reviewing accounts to financial planning. Our electronic vault helps clients keep all their important documents in a secure place, that’s easily accessible when needed. Call our office to schedule a meeting at your convenience.
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