As the year moves further into Spring, it’s time to start thinking about how to refresh your financial life with these Spring financial tips. It may require just looking at things differently rather than making drastic changes.
In the end, you want to put yourself in a position to take care of what’s important to you. Whether it’s protecting your family, saving for retirement, leading a balanced life or simply living within your means—a new look can be just what you need to revitalize your checkbook. Here are five tips to get you started:
- Cash flow. Are you hitting your savings target? If not, what can you change to help you pack away more cash to fund what you value most? Look at your spending with a critical eye. Are you getting full value for the dollars you spend? Every dollar that you save can be shifted toward your highest values, but remember to pay yourself first. If you have a 15% savings target, than you must direct 15% of every deposit toward that goal (saving or investment). Paying yourself first puts your important goals above your spending decisions.
- Retirement plans. Some 401(k) plans offer automatic rebalancing. Choose this option if it’s available so market volatility won’t tilt your portfolio away from a rational allocation. If you don’t have this choice, then you might have to work your way through the website to manually adjust your holdings back to your model. If you have not maximized your contributions, then make sure you are edging your contribution levels upward as often as possible. Remember, even a 1% increase should pay you back generously in the future.
- Assessing your risk management. Do you have any old life insurance policies that you’ve been paying back forever or policies that were given to you by your parents? Do you still need the coverage? Does it still make sense based on your needs? Look at what kind of protection you have from medical to liability, from disability to renters or homeowners. Do you have a deductible or co-insurance that makes sense based on your current financial situation? If you bought your policies when you first started out, you may have signed up for low deductibles because cash wasn’t flowing. But as your financial stability grows, those low deductibles are no longer a good fit. The premium savings can be shifted to more important areas.
- Investment strategies. Sometimes, buying an investment can be a spur of the moment decision. This is a perfect time to review your holdings to find out whether those decisions are currently in your best interest and how they fit into your overall plan. If you’re a stock person, make sure you have a very disciplined and though-out plan for when to sell. If you find a stock you really like, consider whether your feelings are more than superficial. History is full of great companies that no longer exist. Consider your strategy, timeframe and how much risk you’re willing to take to achieve your goals.
- Estate planning and documents. Do you have a Will, Power of Attorney and Health Care Directive? Are these documents still up-to-date or do they need a cleanup because of changes over the years? If you do not have Estate documents, then the only thing you need is to get them done. You’re not alone if you’ve put this off. It doesn’t sound like an exciting thing to spend your money on. But the fact is: if you have children and no Will, that means your State will decide what happens with your children and your estate.
Looking for advice on Spring financial cleaning? Don’t hesitate to call experienced CPAs like Williams and Kunkel, CPA, LLP today in Flower Mound at 972-446-1040 to help.
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