Among the various New Year’s resolutions people make each year, many set goals to be smarter about their money. To that end, we’ll discuss several ideas here to get you started on that path.
Not all of these suggestions may apply to you specifically, but here are a few ideas to get you started with your resolution planning. And they might be applicable to a friend or relative, so pass them along:
Get out of debt: If you’ve compiled a lot of credit-card bills, you’ll want to move quickly to pay them off. Think of it this way: those holiday presents were expensive enough. Don’t make them even more costly by adding on the high interest rates credit cards typically charge.
Build an emergency fund: We hope 2021 will be a great year for you, but it’s best to be prepared for whatever bumps may come your way. The general rule of thumb is to have the equivalent of three to six months’ worth of your income saved away somewhere you can easily access it.
Save, save, save: The Internal Revenue Service encourages you and your employer to save with various programs that give tax breaks. The traditional IRA and 401(K) plans from your employer both give you ways of saving for retirement and lowering your tax bill in the process. The same goes for saving for things like your child’s education, or even healthcare expenses.
Rebalance your portfolio: Stocks have had gains over the past year, so it’s possible they’ve come to represent a larger component of your portfolio, especially if you haven’t rebalanced over the past several months. Of course, moving your investments away from stocks you currently own to other investments means you could potentially miss out on more growth.
But you can also take advantage of some of the gains you’ve realized by selling some of the appreciated assets. And if the market takes a turn, you won’t be hurt as much.
With all of these ideas, you would likely benefit from talking to a financial consultant about addressing your plans for 2021. A trusted advisor can provide you the knowledge to assess these potentially complicated topics, and can help keep you on track as you strive to make your resolutions a reality.