7 Tips to help you restore your financial wellness
You may or may not have made a New Year’s resolution of some sort. Many resolve to get physically fit, but what about financially fit? How’s your financial wellness? Below are 7 tips that may help you get finances in order.
- Create a budget
As you already know, the easiest way to get in financial trouble is to spend more than you earn. When you create a budget and track all of your spending, you may be surprised at how much you spend in certain areas.
- Credit Report
Every 12 months you can obtain a “free” copy from each of the 3 major credit reporting agencies. Review your reports carefully to make certain that all data in your report is accurate. If you find errors in your reports, contact your creditors to dispute these errors.
- Paying down debt
Do you have credit cards with high interest rates or high interest loans? If so, do a little research and decide if it makes sense to consolidate your debt using a lower interest rate. If it’s not possible to consolidate, start paying a little extra on those high interest rate cards regularly until they are paid. Repeat this process for your other credit card debt.
- Investment review
It’s important to review your investments once in a while to make sure they are still earning for you. You can protect your investments by diversifying in different classes of investments. If you have an asset allocation plan in place, to be sure you’re meeting your objectives you can adjust your portfolio as needed.
- Retirement planning
If your company offers a contribution matching retirement plan such as a 401(k) plan, you should take full advantage of it. Your contributions and earnings are both are tax-deferred and will compound over time. In 2021, the 401(k) contribution limit is $19,500 or $26,000 for those are over 50 years of age or older. If you have an IRA, the contribution limit is $6,000 or $7,000 if you’re 50 years of age or older.
- Insurance coverage
Review your policies to see if they need any adjustments to your coverage. If you have term insurance, depending on your age, you may consider switching to whole life. Needs change over time. Policies that were purchased years earlier may no longer provide adequate protection for your family or business now.
- Emergency savings
Are you financially prepared if you lost your job or your business failed? If nothing else, the pandemic has made it clear how important it is to create an emergency fund to get us through at least 6 months if you lost your income or business revenue to significantly decline.
You don’t need to focus on all of these tips at once. Start by focusing on 1 or 2 and move on as you’re able. Before you know it, your finances will greatly improve over time.