Personal finance is the key to living a stress-free and financially sound life, especially when setting goals for the New Year. We are sure you don’t want to keep paying your college bills or a credit card debt all the way till you retire. That is why it is time to get in the resolution spirit and set up personal financial goals that will transform your financial outlook this New Year.
To take the burden off you, we have created this list of personal finance advice that will give you the kickstart on your goals this New Year. Keep reading to find out!
Assess your taxes
You should review your taxes and all the grand events of the past year and make some adjustments to your tax withholdings. The last year has been a rollercoaster of events, and you should check how much taxes you can withhold.
For example, was the coronavirus tax relief under your belt, or did you get a special tax during a disaster. You should check your withholdings from the tax withholding Estimator by the IRS. You also have to file your returns and ensure all your details are up-to-date.
Sort your insurance policies
This New Year, analyze your insurance policies and ensure that you are paying a reasonable premium!
- Homeowner’s Insurance
Homeowners’ insurance premiums and interest rates are volatile due to crime, weather, or any events that negate the policy. This is accredited to the 18 climate evils that struck in 2021 and brought $1 billion in losses.
Hence you should try to reduce your premium by lowering the $500 deductible to $1000 and saving 25% premium costs. You can even save up to 30% when you increase your deductible furthermore.
Another great way to lower the premium is to combine auto coverage and homeowner coverage and save 30% again! If you have added more estate to your portfolio since the last time, it’s time to evaluate your premium again.
- Auto insurance
First things first, make sure you adhere to all the required car insurance obligations in your state. Your car coverage needs different coverages like collision, motorist coverage, liability coverage, bodily injury coverage, etc.
Once you define your criteria, compare and contrast different rates and select the ideal fit for you. The insurance companies also assess various data about you, hence it is important to update all your data.
Diversify your portfolio
Your investments are an essential part of your financial holdings. As life is uncertain, you should review your investments and make some adjustments here and there in your financial portfolio.
For example, the bonds and stocks you hold should align with your risk tolerance and financial situation. They should reflect on your objectives, personal situation, etc.
Look at your emergency fund
An ideal emergency fund is always worth 6 months. However, that is only possible when you have exceptional financial skills and not the 25% of the demographic that do not have any savings or the ones that do not have even $1,000 worth of savings for expenses.
To never stand at a helpless point, always deposit some money to your emergency funds from your salary and build your funds slowly.
Use the flex dollars
An FSA (Healthcare Flexible spending account) can help you build your savings if you spend all the pre-tax dollars before the year ends. Otherwise, you will be losing $550.
Last year, 2021 allowed employees to spend $2,750 unless their employer limited their contribution to some extent. Hence, squeeze in that doctor’s appointment that you’ve been delaying before it’s too late.
And for the New Year: If you also have a wife and children in need of healthcare, it is best to contribute your health care amount to an FSA.
Contribute to college funds
College tuition is reaching sky-high amounts and it certainly drains the financial of if you don’t prepare in advance. A tax-advantaged strategy works wonders in this context.
You should consult a financial advisor to get your finances for your children or children to face no problems in their school, college, or elementary school.
Give back to the community
The charitable activities fell by 6% in 2020. However as the conditions slowly came back up, at the end of 2020, over $471.44 billion were donated. Which was a 5.1% step up from the contributions from the $448.66 billion in 2019.
You can set a new record in 2022 by contributing to the good causes that inspire you. What’s more? You also get the benefits. Your taxable income will be lowered and you make someone smile and help them live better! The act that promotes charitable giving is the taxpayer certainty and disaster tax relief act of 2020.
Look ahead in the future
It doesn’t take financial problems a long time to sneak up on you. Hence, you should adhere to your financial resolutions and never lose the spirit until you pursue them. Your goal is to buy a new vehicle or house. Or you are on the road to making some big changes in the new year and have other personal finance goals to pursue as well.
To achieve them, you need personal finance goals and a savings plan for the New Year. You need to look ahead and keep your eyes peeled for the goal. You should contribute to the savings account and reach your destination. And see the effect that savings bring.
Update all beneficiary designations
You have to keep your accounts, IRAs and annuities in check. Have there been some major family changes since the last year or months? Hence, choosing your beneficiary is crucial in that matter.
To monitor these changes create an entry diary where you enter the beneficiary names alongside dates. You should always remember to assign your contingent beneficiary in case of an unfortunate passing of your primary one. Keep this information in an accessible place and review it whenever changes occur.