The new year can be an exciting time for individuals, couples and families alike. It offers the chance to wipe the slate clean, break old habits and usher in a year full of meaningful change and new goals. When browsing common New Year’s resolutions, the most frequent calls to action include verbs like improving, losing, stopping and learning. With your finances in mind, let’s explore some steps and tips to help you start the new year right!
Improve Your Budget
Establishing or reassessing your budget can be a challenging, yet essential, task at any stage of life. A great starting point for improvement is to revisit and refine your budget for the new year ahead. Much like counting calories for health goals, your budget helps you track what’s coming in versus what’s going out, providing a clear picture of your financial health.
- Start by listing your income, such as salary and wages. If you plan on a job change, use your new income and be sure to estimate your new taxes, too.
- Next, categorize expenses as “necessary expenses” and “discretionary expenses.” This helps identify where you may be overspending and offers opportunities to allocate more toward savings, debt reduction or investments.
- Finally, review the net result. The ideal result is that there is money left over to save. If not, you will need to go back and see what expenses can be reduced.
Lose Excess Subscriptions
With the advent of subscription services, it is easy to automate expenses and forget what you are subscribed to. Here are some tips to help in the new year:
- Review your credit cards and bank accounts to see what monthly charges are being incurred.
- Remove any services that have not been used in the past 3-6 months that can be canceled without penalty.
- Consider a third-party app to help manage subscriptions.
Don’t forget that all these companies will gladly have you back if you change your mind in the future.
Learn About Your Employee Benefits
Companies have a great incentive to keep employees healthy and happy. Employee benefits can be a critical part of your financial plan if utilized. These benefits may include health insurance, retirement plans, paid time off (PTO) and other company specific benefits. It’s important to thoroughly understand what benefits are available and ensure you’re making the most of them at the end of the year and if you have a life change that the benefit can help.
Improve Your Tax Plan
The April federal tax deadline will be here before you know it. Here are key tips to start the new year off right:
- Review your tax withholding. The IRS has an estimation tool available online to make sure you have the right amount withheld for taxes, so you are not surprised by an unexpected tax bill.
- Maximize retirement account contributions. Even a 1% increased contribution can make a big difference long term.
- Keep the end in mind. When you meet with your CFP® professional, discuss steps that can help with your tax efficiency in the new year. These include making charitable donations or considering Roth conversions.
Take Advantage of Financial Coaching
Fitness coaches can do wonders to improve your health and train you on the right habits. Financial advisors can do the same. They can look at your finances with the big picture in mind and offer steps to execute your plan.
The new year offers a powerful opportunity to reflect, reset and take meaningful steps toward your financial goals. By improving your budget, cutting unnecessary expenses, optimizing benefits and seeking expert guidance, you’ll set the stage for a year of financial confidence and growth.
If you are not yet working with a CERTIFIED FINANCIAL PLANNER® professional, the beginning of the new year is a good time to see how working with one could help you. This partnership can help you stay on track throughout the year, ensuring your finances align with your aspirations. Find your CFP® professional today at www.LetsMakeAPlan.org.
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