Our day to day lives keep us very busy. And when we’re busy, we tend to focus on things which are immediately in front of us.
It’s perfectly understandable, but it can be dangerous when we consider the planning and preparation it takes to make consistent, sound financial decisions.
So, as 2015 comes to an end, think about some of the simple - yet meaningful - things you can do to keep your fiscal house in order for 2016 and beyond.
Below are seven tips.
1. Make an end-of-year contribution to your MOST 529 college savings account at
MissouriMost.org. Missourians can deduct up to $8,000 annually, or $16,000 for married couples filing jointly, and savings grow with taxes deferred.
2. Remember the holiday season is a time for giving, and use that to your advantage. Donating to charity is the right thing to do, but it can also benefit you in the form of a tax deduction. You can even deduct from your taxes the value of donated appreciated assets, such as stocks.
3. While examining your portfolio for those appreciated assets, look more broadly at your investments. Do they still reflect your goals? If some of your asset categories have shifted above or below your target, you may need to rebalance to stay in line with your goals and risk preferences. However, don’t check your investments too often. Studies show the more frequently individuals look at their investments, the more likely they are to sell during a downturn of the market. Sometimes less is better.
4. It’s a good idea every year to streamline your insurance costs. Spend some time examining your insurance policies and make sure you have only what you need. Don’t overpay for unnecessary coverage or services. If you are a homeowner, make sure your house is covered for the cost to rebuild, not just the market value. You also should closely consider every type of insurance you might need, including flood and earthquake coverage.
5. Check for any unclaimed property at
ShowMeMoney.com. It is easy and free of charge.
6. Build a financial safety net for you and your family. This doesn’t need to happen overnight, and the objectives of the safety net will vary depending on your circumstances. Someone with a steady job might be able to get by with three months of living expenses, while a self-employed individual might need a larger cushion. Start off 2016 right by adding whatever you can to your savings now.
7. Most importantly, prepare for retirement. For many of us, the concept is so distant we fail to start planning early. Don’t fall into this trap. In the current state of retirement, personal savings and defined contribution plans are more important than ever before. If you can, max out your contributions to your preferred retirement savings vehicle, especially if it comes with an employer match. Today, many 401(k)s can be set up to increase automatically every year. Even a small annual increase of a half percent adds up over time. If you have an IRA, have your contribution deducted from your paycheck automatically. Every dollar saved today is one you will have when it counts the most.
Some of these goals may sound overwhelming, but don’t let that keep you from getting started. Remember it is never too late to save, so start at a reasonable level, say 3 to 5 percent of your monthly income, and aim to increase it every year.
It is always better to reach part of your goals than none at all. It gets easier with practice, and every dollar saved furthers each of your goals over time.
Clint Zweifel is treasurer of Missouri. His spokesperson can be reached at meghan.lewis@treasurer.mo.gov.
