Before you get swept away with gift shopping and spending the holiday season with your loved ones, it’s probably a good idea to get your ducks in a row when it comes to your finances as 2021 comes to a close.
Here are our biggest tips!
Complete an End-of-Year Review
It’s time to sit down and take an honest look at your financial spending over the past 12 months. Did you stay on budget, or spend more than you planned? Did you meet your savings goals? Were you able to pay off your debt, or did unexpected expenses set you back? How is your credit score holding up?
Be honest with yourself as you respond to these questions. Even if you’re finding yourself in a tight money situation, especially with holiday expenses, that’s okay! The first step to getting back on track is knowing that something is awry in the first place.
Identify Large Expenses Ahead
A new year means a wealth of new possibilities – but it also comes with a lot of responsibilities. Maybe you’re planning on moving to a new apartment, or are planning on getting married. Perhaps your son or daughter is scheduled to get braces, or your spouse is gearing up for a big medical procedure. Heck, a home renovation or a brand new car may be in the cards! Whatever the case, it’s never a good idea to procrastinate until a week before the event. That’s a recipe for an unexpected and rapid accumulation of debt, and no one wants that!
Plus, if the past few years have taught us anything, it’s to expect the unexpected. If you haven’t put together an emergency fund, here’s our quick guide to do just that.
Review your Investment Portfolio
Take a close look at your investments. Make sure your financial plan still aligns with your financial goals. Did you just inherit some money? Is there a new addition to the family? Regardless of your personal situation, it’s more important than ever to make sure your investments and portfolio properly align with your life changes.
Your age, risk tolerance, and tax status, among other factors, are all equally imperative when it comes to your investment portfolio, and as you age and life changes, so should your investment portfolio. Setting up a quick 30-minute call with your financial advisor may be a good idea to ensure your investments are ship shape for this upcoming year.
Review your Reitrement Plan
While it may be a bit tedious, going over your retirement plan is a must. Here are a few key things to get done:
Review target dates for retirement and the amount of income needed
Evaluate your strategy to meet your retirement goals and see if it’s still feasible with your current income and budget
Roll over your old 401k accounts from previous employers
Gear Up for Next Year's Tax Return
Whether you prefer digital organization of your finances or you prefer to tackle it the old-fashioned way (hello, accordion files and manila envelopes!), it’s crucial to organize and gather your year-end bank statements, tax documents, and receipts. Your personal tax year is over on December 31st, so it’s time to get the show on the road! Your W2s and 1099s should be coming in the mail in January, so make sure to organize those once they arrive.
Make Charitable Donations
Donate to an organization that’s close to your heart, and you’ll be rewarded in two ways: one, you’ll reduce your taxable income. Two, you’ll feel good about giving some of your hard-earned dollars to a good cause!
We Have Your Back
Starting the new year off on the right foot will be a lot easier knowing you have all the essentials squared away. Have any questions? RMLEFCU representatives would be happy to help you get on the right track with our auto and home loans, incredible APR rates, and more!