Steps to Improve Your Financial Well-Being in 2020

Thursday, December 12, 2019
Steps to Improve Your Financial Well-Being in 2020

With only about two weeks left in 2019, many of us are making plans for various improvements to our lives for the coming new year. A new financial plan may be in order to assure a fiscally strong 2020. It is important to make time this month to plan for your goals. During the holidays it is easy to get caught up in the hustle and bustle of the season if you don’t take the time to be quiet. Think of December as a launching pad that will allow you to get focused in 2020.

Below are some things you can do before the year comes to a close so that you can start the new year on a strong financial footing.

Recommit to yourself.

Make yourself a priority. We tend to put family first at this time of year, but it’s important to make sure you are setting financial goals for yourself.

This can mean investing in your future by taking a class, putting more money aside in your 401(k) or investment account or just shoring up your emergency savings.

Review your financial goals.

Take a look at your financial and personal goals and make sure they are aligned. Assess your accounts and investment portfolio and tweak if necessary.

If you have a financial planner, make an appointment to meet or talk by telephone before the end of the year to make sure you are heading in the right direction. If your investments are automated, it’s a good idea to speak with an expert just to get another perspective.

It also may be time to put yourself out there for a job promotion or salary increase. Experts suggest listing all of the reasons that you deserve it and then getting feedback from someone in your organization that you trust. Then, practice asking for what it is you feel you deserve. This way, when it is time for your annual review, you will be prepared.

Make a savings plan now for next year.

If there is something you want to spend money on next year, such as a vacation, you need to plan for it now. This is a perfect time to open both a La Cap Vacation Club account and a Christmas Club account (click to learn more) for 2020. If your plan is to save for these events, these accounts will bolster your efforts.

Determine how much money you need to set aside per pay period to reach your goal. Then, make a plan to direct that money into your account. Perhaps, you could ask your human resources department to direct deposit it into a savings account. If you are disciplined enough, you can simply move the funds into the account on your own.

Establish an emergency fund.

It is also a great idea to have an emergency fund. Financial experts recommend that you have three to six months of your monthly expenses set aside, in case of an emergency such as a layoff or an unexpected major expense. If you don’t already have one, set aside a small amount each month until you have built up enough to cover any emergencies. This way, you won’t go further into debt while recovering from the unexpected expense.

Mind your taxes.

As the year comes to a close, make sure you are doing everything you can to save on taxes. Take a look at your investments. If you have sold or want to sell some stock that has done really well this year, think about other equities you may want to shed that aren’t doing well.

Also, make sure to use up the money stashed in your flexible spending accounts that allow you to put aside cash on a pretax basis for medical costs. The distributions are tax-free as long as they’re used toward a qualified medical expense. You generally have until the end of a calendar year to spend the money you saved. If you do not, you may potentially lose that money.

Check your credit score and credit report.

Your credit score affects the interest rates you qualify for on credit cards, mortgages, and other types of loans. A bad score can wreck your budget, preventing you from getting credit and increasing the amount of interest you have to pay every month.

Also, identity thieves can ruin your credit score by creating new accounts in your name and racking up unpaid bills. Therefore, it is essential to check your credit report and look for any errors or signs of fraud.

You may check your credit score for free once per year. Visit Annual Credit Report to request your free credit score. This website is supported by all three credit rating agencies: Equifax, Experian and TransUnion.

Max out your 401(k).

If you didn’t put the maximum amount allowed by federal law into your 401(k), 403(b) or thrift savings plan, now is the time to add more, if you can.

The contribution limit for 2019 is $19,000. Those ages 50 and older can put as much as $25,000 into their 401(k) accounts thanks to the $6,000 catch-up contribution the IRS allows.

Or, look ahead to next year and see if you can increase the contributions from your paycheck in order to put more aside. The 2020 contribution limit is $19,500, while the catch-up contributions for those 50 and older is $6,500.

Be sure to consult a financial tax expert before making a change.

Reflect on the positive, too.

Don’t just focus on the negative. Make sure you also reflect on what went right this past year. Taking a step back and focusing on the positive can help you see what worked for you and put you on a path toward a secure future.

Look at all the great things that happened and think about how you can duplicate those results going forward.