If we keep looking back, we will find ourselves headed in the wrong direction.
Managing our finances, re-balancing our portfolios knowing where we stand financially is critical in the process of making sure you do not outlive your money. It’s always easy to close our eyes to all the overwhelming ideas and noise about what to do and want not to do. However, proceeding blindly will cost you dearly. Here are a few simple yet critical tasks to perform yearly that will keep you on point with the future you want to create. The first steps are to understand where your starting point is.
Take a close look at all debt. Make a list of all your credit card balances, interest rates and minimum monthly payments. Pay off the highest-rate card first, adding extra money each month. Or, you can pay off the lowest balance card first, and then hide it and don’t use it again.
- Take a look at your 401k to see what you own then head over to Morningstar.com to see how your fund performed over similar funds last year. This is simple and if it’s too much trouble for you to undertake, be prepared for unpleasant surprises.
- Set realistic goals by identifying short- and long-term tasks that can help you reach the financial independence you seek. You can’t get ahead if debt is bogging you down.
- Go to ChoosetoSave.org and click on the Ballpark Estimate tool. Answer the questions honestly about where you stand now and when you hope to retire. Then, with one click, you’ll see a realistic assessment of your prospects.
- Not saving enough? You must learn how to live on a little less than you are doing now. Have more taken out of your paycheck every month and put into either a workplace retirement plan or an automatic IRA contribution.
- Not organized? Do you have to go through a years’ worth of paper receipts stuffed in drawers at tax time? It is symbolic of a haphazard approach to one of the most important aspects of your life. Keeping your financial act in order is essential to financial success. Perhaps it’s time to download an on-line software like Quicken to track your spending and categorize it. Apps like Mint, PocketGuard, or You Need a Budget can help you stay on track and focused on your goals.
Do you remember who if anyone you named as beneficiary of your retirement accounts and insurance policies? This is a simple process that involves signing on to your account and clicking on the Beneficiaries tab. Remember we must plan with the end in mind. At your death, this money passes directly to the person or people you have named. As children reach maturity, they can be direct beneficiaries. Also consider updating your estate plan.
A little work now can pay off big when you may need it the most!
