Step 1: Check in on your accounts
First, take a step back and do a general inventory of all your accounts. Are each of your accounts serving a purpose? Are you contributing to a retirement account? Do you have an old retirement account you may have forgotten about? Did you switch banks and maybe have a small balance sitting somewhere? Do you have an emergency fund in place? Whatever your situation, here are a few things you can consider:
- Consolidate your accounts. Consolidation can help you have a complete view of your finances, potentially reduce fees and tax implications, and track your spending and saving.
- Automate your contributions. Automation and consistency can help you save and invest more. Taking the decision point and action out of putting money into your accounts can help ensure you’re contributing regularly.
- Fund your emergency account. Everyone needs emergency savings, and planning ahead is key. Having an emergency fund in place can help give you peace of mind if something were to happen unexpectedly.
- Optimize saving for retirement. If you’re working and have access to an employer retirement plan, like a 401(k) or 403(b), check your contribution percent. Start by making sure you’re taking advantage of your employer match, if applicable, and then aim to save a total of 15% (including your employer match). If you don’t have access to an employer retirement plan, consider contributing to an individual retirement account (IRA).
Step 2: Set clear money goals for the year
When setting goals, you may find yourself making a mile-long list of things you didn’t get to last year or what you’re behind on, which could lead to some negative emotions. Instead, challenge yourself to make a list of things you did well or accomplished and reframe your thinking to be a balance between what went well and what you could improve this year.
Knowing your destination can help you map the best path to get there. Particularly for large or ambitious goals, it can be helpful to plan out the specific steps you’ll need to take to achieve your goal. Your money goals should be unique to you. Maybe it’s paying off credit card debt or buying a house or taking that bucket-list trip or retiring. Here are a few tips to help you set and achieve your goals:
- Aim to make your goals specific, measurable, and achievable.
- Start with 2 or 3—you can always add more later.
- Hold yourself accountable and check in throughout the year. Maybe enlist a trusted loved one or family member to help keep you on track.
- Ask for help if you need it.
- Stay flexible! Life happens and that’s OK. You can adjust your goals and timeline accordingly.
Step 3: Optimize your investment accounts
Investing may look a little different for everyone depending on where you are in your life. Maybe you’re just starting your career, and you plan to open your first investment account this year. Maybe you’re in your peak earning years and you want to make sure you’re planning ahead for taxes. Maybe you’re approaching retirement, and you want to make sure your risk level aligns with your upcoming life change. Consider asking yourself these 4 questions about your investments:
- Do your accounts still feel right for your goals?
- Are your investments diversified?
- Are you comfortable with your risk level?
- Does DIY management work for you? Or might you benefit from professional help?
Step 4: Consider enlisting professional help
Think about the professionals you already have in your life—a team of doctors to see you routinely or when something happens, a team of tradespeople to perform annual maintenance or sporadic repairs if something breaks, a team of beauty and wellness specialists all with different areas of expertise. Finances are no different. Consider enlisting:
- A financial professional to help with financial planning and/or investment management*
- A tax professional to help navigate specific tax considerations
- An attorney to help with estate planning and protecting your assets
Step 5: Plan for tax season
We all want to keep as much of our money as we can, but sometimes taxes can make things complicated. Many of us only focus on taxes at the end of the calendar year or as we prepare our annual tax return. But taxes are a year-round consideration. Here are a few things you can do to help you save this year:
- Consider contributing to tax-advantaged accounts ahead of the April deadline (IRAs and HSAs).
- Check to see if your tax bracket has changed and if any federal or state tax laws have changed that may impact your filing.
- Make a plan for your refund (if you’re anticipating one) or for your tax bill.
- Gather and organize all your tax documents to give you peace of mind and help you feel prepared.