Summer has begun and for some, it is the time to disengage from real life issues, like finances. However, there are easy, quick ways to stay on top of your finances and still have plenty of time to head to the beach, mountains or enjoy a stay-cation – just follow the tips below. Consider this your mid-year personal finance reboot!
Track Your Money: In the age of digital convenience and easy-to-use apps, there is no excuse for failing to get a handle on your money. These apps are designed to make it easy to track what’s coming in and more importantly, what’s going out!
Check/Repair Credit: This fall will mark the one-year anniversary of the Equifax data breach, but many Americans have become complacent when it comes to checking their credit score since. Stay on top of it by going to AnnualCreditReport.com to review and correct your report, if needed. In the event something is incorrect, be persistent – it can often take time and energy to have errors removed.
Insurance: Make sure you have the coverage you need and are not overpaying.
. Don’t wait for a natural disaster to strike before reviewing your policy. As a reminder, most standard homeowners’ policies cover structural and water damage, but only in limited circumstances, like when a falling tree knocks a hole in a roof or breaks a window, allowing rain to fall inside. Most policies do not
cover damages that result from rising water unless the homeowner lives in a designated flood zone and has purchased insurance through the federal government's National Flood Insurance Program
. Also, check to see if you have at least 20 percent equity in your home – if so, you may be able to drop your Private Mortgage Insurance (PMI).
Auto. If you have an old car worth under $5,000, eliminate collision and comprehensive coverage and increase deductibles.
Liability. You may be able to earn discounts by purchasing car, homeowner’s and umbrella liability insurance coverage from one company.
Life. Needs often decline as you age, so you may be able to get rid of an old policy or consider replacing an expensive policy with a cheaper term one.
Consolidate accounts: Do you have multiple bank accounts floating around? By combining them, the resulting higher balance may help avoid fees and even help you get better deals. Not to mention, it will help streamline your personal finances. The same rule applies to orphaned, old retirement or investment accounts that are looking for a home. Combining accounts makes it easier to monitor your entire portfolio and ensure that your money is properly diversified.
Retirement: Still haven’t calculated your number? You are not alone. According to the Employee Benefit Research Institute’s 2018 Retirement Confidence Survey, a whopping 62 percent of workers have not determined how much money they will need to have saved so that they can live comfortably in retirement. Go to your retirement plan website, use EBRI’s “Choose to Save Ballpark E$timate” or better yet, seek the advice of a CFP® professional who can give you personalized and specific information on the status of your retirement goals.
Boost retirement contributions: Crazy as it is, the first half of the year has come and gone, and if you are lucky, or perhaps frugal, you may find yourself with a little extra cash on hand. If so, let’s make a deal: go ahead and allow yourself to spend some of the surplus on a summer indulgence and use the rest to increase your retirement contributions. This year, you can sock away $18,500 in most employer-sponsored plans ($24,500 if you are over the age of 50) and $5,500 into a Traditional or Roth IRA ($6,500 if you are over 50).
Investments: Volatility has returned to the markets, which while unnerving at some points, should not meaningfully impact long-term investors. Threat and enactment of tariffs has caused many investors to flee large U.S. cap stocks and rotate into smaller, domestic-focused ones and strong growth has pushed down bond prices since the beginning of the year. All of which is to say that the end of the quarter is the perfect time for long-term investors to rebalance accounts so that allocations remain in check. If possible, choose auto-rebalancing so you don’t have to worry about the direction of markets or when it’s time to reallocate.
For more guidance when working through these steps and other ways to get your finances in order, talk to a CERTIFIED FINANCIAL PLANNER™ professional today or visit www.letsmakeaplan.org.