Be Financially Successful in 2021: 5 Things To Do Before The End of The Year
Another year is coming to an end and the new year usually brings to mind resolutions, big plans to make a change, and revived dedication to improving ourselves. If you’re telling yourself that you will start going to the gym three times a week, but know deep down you’ll hit snooze instead, you’re setting yourself up for failure. Here are some other ideas that won’t require you to get out of bed before 6 am, sweating at the gym next to a judgmental beefcake, or stop you from indulging in raw cookie dough at midnight after polishing off a bottle of wine.
Most of these things can be done from bed on your laptop or iPhone, but will surely make 2021 a year you can be proud of. Come December next year, you’ll be glad you took the initiative on the following:
1. Max out your employer-sponsored retirement plan
If you participate in an employer-sponsored retirement plan through work and have not already maxed out your contribution limits, consider increasing your contribution. If you are planning on getting a bonus at the end of the year, and only contribute 1% to your plan, then you only have the potential for a 1% match from your company assuming they don’t put more in than you put in. If you can increase your contribution to 3% and are eligible for a full match, you’ve just banked an extra 2% of your bonus for free — your employer is giving you this money. Take it!
2. Open an IRA.
If you are planning to contribute to an IRA, whether Traditional, Roth, or SEP in 2017, you must open it by December 31st, 2016. An IRA can allow for additional retirement savings to be stashed away separate from your employer-sponsored plan or work on its own if you don’t have a 401k or 403b through work. The bonus here is that IRAs have many more investment options than your 401(k) so you may be able to better diversify your portfolio this way.
3. Review your statements.
Take a look back at the past year. Download credit card statements for each of the 12 months and notice where you are spending the most. Many credit card companies have tools that break down your spending into categories right on their website. See where all that money is going. Is it at the gas station? Is it out to eat? Are you buying new clothes each week (that you probably don’t need)? Some things we can cut back on and others we can’t. But you won’t be able to do better next year unless you can find areas that need improvement. Even if you eat out one less night per month, you might save $1,200 throughout the year. If invested properly, that could equal $15,000 over ten years if you keep it up! Crazy huh?!
4. Set your 2022 personal financial goals.
Set specific dollar goals for certain categories. Measurable and realistic goals are the ones most likely to get accomplished. Maybe you want to save an extra $5,000 next year. That equals about $417 each month. Break that down weekly and it’s only $96 a week. Set up an automatic transfer to your brokerage or savings account and you’re smooth sailing.
5. Set up a meeting with a Financial Advisor.
If you’re not already working with someone, set up meetings with a few local advisors and hire one. Now that you have taken stock of the past year and know what your goals are going forward, you’ll be able to have a productive meeting where you share that information with your advisor. She will then be able to choose investments and strategies that are most likely to get you to your goal. If you’re not sure what your goals are, your advisor can help you determine them. Plus, with her help, you will have less work to do next year because she will be tracking the performance of your accounts and keeping you on track.
At the end of each year, you should review your successes and areas that need improvement. Most likely each year will be different and your goals should reflect that. Keep your advisor in the loop by updating them of your ever-changing life and plans. Check these five items off your list and give yourself one more reason to celebrate big on New Year’s Eve. Cheers!
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.