Creating a financial game plan for the new year is going to be unique to you, depending on your individual circumstances. But, if your New Year’s resolutions include getting your financial life back on track, you can use these goals as a starting point.
Set a Personal Savings Goal
Don’t just pick an arbitrary number. Look at your total income and expenses to determine a realistic goal for how much you can set aside each month.
Save an Emergency Fund
If you don’t already have a rainy day fund, this should be the first savings goal on your list. Generally, you should have enough for three to six months of expenses, including any expenses for your dependents.
Track Expenses and Set a Realistic Budget
If you don’t know how much you spend in a month, you won’t be able to budget. That’s why tracking your expenses is so crucial. First, keep track of what you spend, then make a realistic budget you'll be motivated to follow with some fun expenses built in.
Get Your Retirement Accounts in Order
Take a look at how much you’re contributing and see if you’re saving enough for the retirement you want. The best-case scenario is usually to make the annual maximum contribution to these accounts.
Learn About Investing Beyond Retirement
If you’ve had a retirement account(s) for a few years and still have some income left over, think about other investments. For example, talk with your financial advisor about diversifying your portfolio or contributing to other accounts like an HSA or Roth.
Pay Down Credit Card Debt
It might go without saying, but paying off any credit card debt you have should be a major goal in the new year. Interest rates on credit cards are generally much higher than other forms of debt, and that’s why you want to get rid of it first.
Discuss Finances with Your Partner
As difficult as it might be, you need to talk about money. You should get into things like student loans, credit card debt, financial goals and money habits to ensure you’re on the same page.
Update Your Financial Model
Make sure you have an updated balance sheet, income summary, expenses, cash flow statement, and insurance summary including cash values. Evaluate if you’re ahead of or behind your plan and adjust accordingly.
Use 2020 to get a clear picture for your financial future and make sure you’re on track for retirement. Contact Wealth Enhancement Group and see how an advisor can help simplify your financial life.
This article was originally published in the January 2020 issue of Living on the Lawn.
The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual.
