The new year is underway, the kids are back in school and my beloved Alabama Crimson Tide's football season has come to a very disappointing finish. With that it is time to fully focus now on the things we can do to improve in 2019. As a financial planner I will focus just on financially related items. I need to lose 10 pounds like most people, ok, closer to 20, but unfortunately I don't have expert advice on how to do that so will stick to what I know.
Below is a list of 8 things you can tackle this year to put your personal finances on more solid footing. Does it feel overwhelming to try and tackle all items on this list in one year? Don't stress about it. It is unrealistic to do all of these at once. Most of just don't have that much money to dedicate to all of these goals at once. Start at the top of the list and work your way down if you can. Items 2, 4, 5 and 6 can all be done without requiring extra money so if nothing else give these a try.
1. Assess your emergency savings – You should have a goal of 3 to 6 months of living expenses. If you are short of this target see if you can set aside a little more to help be ready for unexpected emergencies. You might find saving the amount to hit the 3-6 month goal could be overwhelming. That’s ok, just make a conscious effort to address the goal and increase your savings to the point you can. Realistically it may take several years to hit this goal.
2. Evaluate your insurance coverages – Review your coverages on your home, life, auto, disability and liability/umbrella policies. If you don’t have one of these policies consider getting them to add the protection you need. Review your coverage amounts to make sure they are adequate for the amount of protection you may need. Likewise look to see if you are paying for coverage you don’t need or can increase your deductible to reduce your premiums.
3. Review your debt situation – How much debt are you carrying on high interest rate credit cards? Paying down debt in some situations can be even more beneficial than investing. If your credit card debt has gotten too high come up with a payment plan that makes sense to start reducing this. Your money should be used for doing better things than paying interest.
4. Review your budget – Are you feeling a pinch with your monthly expenses? Give those expenses a review and see if there are places you can easily trim a few bucks. Many people overlook these small savings but a handful of them can suddenly add up to $100 per month or more pretty quickly. This could be looking for a less expensive phone, tv or internet plan for example. It could also be canceling unused services like a gym membership or various streaming, book or music services.
5. Review your tax withholding – With the tax cut of 2018 most people found themselves in a lower tax bracket and therefore had less taxes withheld. The downside is many deductions were also limited or removed and some people may find themselves still owing a similar amount in taxes as they did before. This could result in some people actually owing federal taxes when they file their returns this year.
6. Adjust your portfolio – The start of a new year is a great time to review your investments and see if your portfolio is still in alignment from a risk, allocation and quality standpoint.
7. Increase your retirement plan contributions – Your goal should be to set aside 15% of your income for long term financial goals. If you are short of that target and think it will be too big of a stretch to get there all at once start with increasing your contributions by 1%
8. Consider additional investing – If you want to invest outside of an employer retirement plan or maybe don’t have that option look to contribute to an IRA, a Roth IRA or a taxable account. The right option for you will depend on your circumstances and goals.
If you decide you want to address any of these and aren't sure how or would like help, contact me at email@example.com for a risk free discussion to get you on the right track. Best of luck to everyone and have a great 2019!