The New Year is a great time to update your financial plan. Here are 6 tips:
- Check Your Credit
Your credit history and credit score affect much of your financial life. Lenders use your credit report to qualify you for credit (mortgages, car loans, credit cards, student loans, personal loans). It shows your payment history—how well you previously handled credit—as well as the status of current accounts. Even landlords and potential employers may look at your report before they make a decision, so you want to ensure it’s accurate. Plus, checking it could help you spot signs of identity theft.
2. Build an Emergency Fund
Having an emergency fund ensures you’re ready to meet unexpected challenges like job loss, medical bills or car repairs. If you don’t have one, start the New Year off right by opening an account where you can set aside some money.
Keep your emergency funds separate from the account you use for spending or paying bills.
How Much Do I Need? A good rule of thumb is saving 3 to 6 months’ worth of living expenses. But, if you’re just getting started, begin with a smaller goal—like $1,000. You don’t need to save it all at once—break it into manageable amounts that you add regularly.
3. Pay Off Debt
Since most people can’t afford to pay for a car or other large purchases with cash, they have debt. You can reduce its impact on your budget by making a plan to pay it off as soon as possible. You’ll pay less interest and have more resources if you need to rebound from a financial setback.
4. Think Beyond the Short Term
While it’s smart to focus on your current financial situation, don’t ignore the future. Long-term savings goals like college or retirement are time-sensitive. So, as you make decisions that affect you this year, consider long-term goals, too.
5. Review Investments
Many people reduced contributions to IRAs and other retirement accounts during the early days of the pandemic out of concern that their income could change. However, there’s a solid reason to continue or restart them. You’ll want to stay on track for retirement, so you’ll have the funds you need in the future.
Also, check how aggressively your funds are invested. Does it match your risk tolerance? Or would you be more comfortable if you temporarily shifted your investments to lower-risk categories?
6. Get Help
With so many factors to consider, you may want help navigating your plan for the future. Good Life Financial Advisors of Tampa Bay can help you take the next step toward financial success.
To schedule a meeting over the phone or in-person, please click: https://go.oncehub.com/johnsfletcher
Happy New Year!