With the new year underway, many people are hoping to make improvements to their financial situation. Some of the most common money goals people have are to save more and pay down debt. These are important goals to have, and ones you should always be working toward, but there are some other aspects of your financial health that you need to pay attention to, and the start of a new year can be the perfect time to do so. Here are a few steps toward healthier finances you may consider making this year.
1 // Reevaluate your retirement plan
If you’ve already taken the important step of contributing to a retirement plan, whether it’s a 401(k), 403(b) or IRA, then you’ve made a necessary investment in your future. But your work here isn’t done. Most Americans don’t have enough saved for retirement, and it may not be wise to depend on social security. However soon or far into the future retirement may be for you, it’s important to consider how much money you will need to live comfortably through retirement. The amount you’ll need will depend on your lifestyle, location and other factors like health, but there are plenty of calculators online, such as NerdWallet’s, that can help you estimate it.
While you’re evaluating your retirement plan, another step you may want to consider is consolidating your retirement accounts. If you have had 401(k)s at multiple employers, then it may be worth rolling them over into one account, either to make managing your accounts easier or to optimize your investments. Consult your tax advisor if you think this may be an option for you.
2 // Review insurance plans
Another step you can take in the new year to check up on your finances is to review all of your insurance plans. If you haven’t already, take the time to read through the policy and understand exactly what is covered. Ask yourself what you will get if x or y happens, and decide if the plan is right for you. To help you fully understand your coverage, you can contact your agent or the customer service line and have them walk you through each feature of the policy. This way, you can determine if you are over-insured and paying for features you don’t need.
If you have more savings now than when you started your insurance plan, you may also want to consider requesting an increase in your deductible so that you can have lower monthly payments. Agreeing to a deductible of even a few hundred more can save you a lot of money in the long run.
3 // Consolidate debt
You already know you need to pay off your debt as soon as realistically possible, so we won’t go into detail about why. But one financial move regarding debt that you may want to consider making this year is to consolidate your credit card debt, meaning to roll multiple debts into one payment. This option isn’t ideal for everyone, but if you have a manageable amount of debt and your credit is in good standing, then consolidating can make your life easier by eliminating the need to juggle multiple payment plans. You could also end up paying less in the long run if you roll your debt into an account with a lower interest rate, so make sure to identify the accounts that are costing you the most. Two common ways to consolidate debt is to get a fixed-rate debt consolidation loan or to transfer your debt onto a balance-transfer credit card with a lower interest rate.
// Let us help
It’s important to periodically reassess your finances to make sure you’re managing your money wisely. These three moves can help you ensure you don’t spend more in the long run, and they can be useful in revisiting your financial health for the new year, but there are more factors in your overall financial picture that you should consider. Luckily, you don’t have to figure everything out on your own. Your neighborhood credit union is always here to help—just call your branch to set up a free financial check-up with one of our staff, or ask about our banking and investment solutions.
Editor’s note: parts of this article were sourced from NerdWallet, Time Money, Forbes, The Simple Dollar and The Balance.