Get the New Year started on the right foot by tackling these five common financial planning issues. The best part? None of them will take you more than 15 minutes to accomplish.
The New Year is a natural time of reflection and growth -- hence the infamous New Year’s resolution. Unfortunately, we often make big goals that can be hard to achieve, which can be really discouraging come February!
This time, why not start off the New Year with a financial resolution that’s easy to achieve? None of these ideas will take more than 15 minutes, but their positive impact will set you up for a great financial start to 2015.
Boost your 401(k) contribution
While any contribution to your 401(k) is a great beginning, the best way to ensure financial security in your older years is to contribute as much as you can. So, if you don’t already make the maximum contribution, now is the time to take a small step in that direction. Track down help from Human Resources and commit to boosting the amount you set aside.
It can be a tiny amount or a large one: the point is, any additional savings will positively impact your retirement.
For example, if you’re currently saving $6,000 per year ($500 per month), your account will be worth about $86,500 in 10 years at 7% average growth. But if you increase your contribution just a little, say to $600 per month, your account will grow to $103,000. That’s a big difference for the equivalent of about $20 a week. Used this calculator
Another way to save more without doing any calculations is to contribute your raise, if you get one. Some 401(k) plans have this as a free feature, boosting your retirement savings by your raise amount each year, but you can easily do it manually. It’s a quick and painless way to generate big savings over the long run.
Automate your payments
A major source of stress when it comes to finances is making payments. Between credit cards, children’s activities, utilities, and the mortgage, you might find yourself scrambling to remember if all those checks went out or not.
Consider this New Year’s resolution that takes no time, but gives you benefits month after month. Set up automatic bill payments to save yourself time and never worry about missing a payment again. It’s a free service with most banks, and it will allow you to pay everyone from your landlord to your child’s piano teacher to your credit card without any hassle or a second thought.
You can also use automatic bill payment to pay yourself. If you don’t already contribute to a savings account, consider auto-paying a small amount into an account each month. You’ll be shocked at how little you miss the money, not to mention how quickly it accumulates.
Without the stress of thinking about all these little payments, you’ll have more time for other, more important things -- like piano recitals.
Check your beneficiaries
Whether it’s your 401(k), other account, or an insurance policy, the New Year is a great time to do a quick review of your beneficiaries. Once you take action on this, you might discover that life changed a lot when you weren’t looking!
You’re likely to find beneficiary designations in your:
- Retirement accounts, including 401(k)s and IRAs
- Brokerage investment accounts
- Bank accounts, including savings accounts
- Transfer on Death accounts
- Certificates of Deposit and US Savings Bonds
- Life insurance policies
Depending on the type of account, state or federal law might provide you with a default beneficiary. For example, in community property states your spouse would be the default beneficiary of your IRA account. In order to set your own beneficiary, you’ll need to fill out the bank, brokerage, or insurance company’s form, and it’s recommended that you send it via traceable means, like certified mail. And be sure to always keep a copy on hand for your own records!
By updating your designations, you’ll have the peace of mind of knowing that your family will be protected should the worst happen. This can help you with your New Year’s resolution to continue taking care of your loved ones.
Tackle those credit cards
Make 2015 the year to take action on your credit card debt. Your first order of business should be a call to your credit card company to see if you can’t get an interest rate reduction. This way, more of the money you pay every month will go to where it’s most needed: your principal.
That might take more than 15 minutes, but if you still have time, think about how you can wipe out your high interest debt. There are a number of strategies for conquering debt, so if you’re in this situation take the time to look for a method that will suit your situation and your temperament.
For example, maybe you can put a year-end bonus towards your highest-interest credit card. Or you could consider using the “latte method” to set aside a little bit of extra money each week by skipping out on one or two lattes.
Whatever strategy you choose, you’ll be very glad you took the time to take that first step to beat your high interest debt once and for all!
Donate to charity
Finally, the holidays and the start of a brand new year are a great time to reflect on our good fortune and to think about how we can help others. A common resolution is to take care of others.
Charitable contributions are a source of great satisfaction for many of us, but we often neglect the causes closest to our hearts. So this year, take the time to make a contribution in celebration of the New Year. Whatever the cause, you’ll be happy to have started the year by putting others first.
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