Between holiday shopping and family festivities, financial planning probably isn’t at the top of your to-do list. However, with 80 percent of Americans facing some form of debt, the end of the year is an important time to review your financial picture and make adjustments for a successful rollover. To help you get ahead of the new year, we’ve put together a checklist of items to keep your finances in good health.
Review your annual spending
Between wrapping presents and celebrating the season, schedule some time to reflect on your financial milestones this year. Did you take out a loan to make a significant purchase, such as a car or house? If you acquired new debts that negatively impact your monthly savings, consider refinancing with a low-interest personal loan from DEXSTA. In many cases, refinancing high-interest debts can help you consolidate monthly payments to keep your savings on track.
Update your budget
Remember to follow the 50/30/20 rule as a budget baseline. This means 50 percent of your take-home income goes to essential needs, 30 percent to non-essential wants, and 20 percent to savings. If you fall short of saving 20 percent after reviewing your annual spending, look for opportunities to cut costs in the new year. Is there a monthly subscription you can live without? Can you switch from name brands to generics? You might be surprised by how much seemingly small expenses add up over a year.
Check your credit report
Considering one in five Americans find errors in their credit report, it’s good practice to check your report regularly. Especially at the end of the year. By making it a habit to stay informed, you can catch costly mistakes before they become problematic. Plus, checking your credit report is easy and free. Each year, you’re entitled to one complimentary credit report from annualcreditreport.com. This includes reports from the three major credit bureaus. So you can ensure the information on your credit reports is current and correct. If your report is less than satisfactory, implement strategies to boost your credit score in the year ahead.
Evaluate your retirement contributions
Maxing out your retirement plan contributions at the end of the year can be an excellent source of tax-free retirement income. If you have a 401K through your employer, now is a fantastic time to review what you’re contributing and ensure your savings align with your retirement goals. If you want to increase your contributions starting in January, you’ll likely need to submit changes in December. Likewise, an Individual Retirement Account (IRA) provides many tax advantages for retirement savings. If you don’t yet have an IRA, DEXSTA can help. Contact us to learn more about your retirement savings options.
By taking these financial planning steps now, you’ll be on your way to achieving your financial goals in the New Year.