Winter is a time for reflection and planning and a time people often look over and reassess their fiscal health. While you’re looking back on 2021, be sure you’re prepared for the New Year with these five financial tips.
This one may seem obvious but saving a little bit of money at a time is often something people overlook. Unexpected costs related to sudden health problems, car issues, or other unforeseen challenges can show up at any moment.
Having money in a savings account builds interest on its own. Although the interest growth is small, a little bit goes a long way. Regardless of how you decide to save your money, make sure you set personal limits and restrictions for yourself. These limits will help ensure you don’t dip into your savings with frivolous spending.
If your workplace offers a retirement plan, such as a 401(k), make sure you’re contributing as much as possible. Most workplaces match a percentage of what you contribute up to a certain dollar amount.
If applicable, keep track of your Flexible Spending Account (FSA) throughout the year as well. Most FSA funds aren’t available to rollover for the following year, meaning if you don’t use these funds, you’re essentially throwing money down the drain. Make sure you’re taking advantage of all funds available to you.
While we recommend periodically checking your portfolios, the beginning of the year is a great time to take full inventory of your finances. Make sure your investments are consistent with your risk tolerance and goals.
Experts also recommend this step to help plan for a different tax landscape. Legislators are considering adjusting the tax bracket threshold to take in inflation concerns. Taking a detailed look at your investment portfolio will ensure you’re accruing enough in passive income in case something unpredictable happens, like losing your job or medical expenses.
While creating your yearly budget, make sure to factor in your debt as well. Experts suggest that the easiest thing to do is to face debt straight on. Whether you prioritize high-interest payments like credit card debt or choose small payments for a variety of debt, the hardest part is often just starting.
Automatic payments make debt easier to manage and can help improve your credit score. Check your payments at least once a week to ensure accuracy and avoid potential fraud or statement errors. When it comes to other monthly expenses, such as streaming services or support platforms like Patreon, it’s important to review what services you used the most and cut out the ones you can live without.
Refinancing your home has several advantages, including a lower interest rate, shortening the term of your loan, and improving your credit score. Certain types of refinancing, such as a cash-out refinance, can directly provide money into your pocket that you can use however best fits your needs. To learn more about refinancing and other home financing solutions, contact us today.
(Sources: Forbes, CNBC, and US News)
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