A new year. New resolutions. Here are five ideas to consider to help improve your financial health in the upcoming year.
- Save more for retirement. Plan for the future by feathering your retirement nest egg. For instance, you can contribute up to $20,500 to a 401(k) account in 2022, plus another $6,500 if you’re age 50 or older. Plus, your company may provide matching contributions up to a stated percentage of compensation. And you can supplement this account with contributions to IRAs and/or other qualified plans.
- Update your estate plan. Now is a good time to review your will and make any necessary adjustments. Circumstances that can cause your will to be updated are births, deaths, marriages, divorces, etc. Also, review trust documents, powers of attorney (POAs), and healthcare directives or create new ones to facilitate your estate plan.
- Rebalance your portfolio. Due to the volatility of equity markets, it’s easy for a portfolio to lose balance against your investment objectives. To bring things back to where you want, review your investments periodically and reallocate funds to reflect your main objectives, risk tolerance, and other personal preferences. A balanced portfolio will put you in a better position to handle the ups and downs of the markets.
- Review, consolidate, and lower debt levels. One sure-fire method for improving your financial health is to spend less and save more. This is the first step is to start chipping away at any existing debts. This may mean giving up some luxuries, but it’s often well worth it in the long run. Pay extra attention to debts with high-interest charges like credit card debt. If possible, consider consolidating several of these debts into one or two obligations if you can lower your interest rate in the process.
- Contingency planning. No one can foresee every twist and turn that 2022 will take. To avoid potential financial hardship, look to improve your emergency fund by setting aside enough funds to pay for six months or more of your expenses in case of events like a job loss or a severe health issue.
These five tips can help you thrive in 2022!