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How to get Smart and Intentional with your Finances

A new year often inspires new goals. It’s a great time to assess where you stand personally, professionally, and financially. Afterall, you have months to make smart decisions with your money. And then, just like that -- a few months have passed because life was busy. The good news is that you’re not alone, some stats estimate that as many as 90% of people don’t stick to their New Year’s goals. If this sounds familiar, don’t worry, there’s still time to get smart and intentional with your money.

You may have seen John Roland’s comments to CNBC about things to consider by the end of the year. However, if you didn’t have chance to take stock of your finances in December, the first quarter is still a great time to review where you can make improvements. The busyness of the holidays is over, and your spring and summer plans haven’t materialized yet. You’re in the 'sweet spot' to make some serious progress towards your financial goals. Read on for some tangible ideas to get yourself back on track:

Are you contributing as much as you can to your 401(k)? The IRS increased the annual contribution limit for 2022. This year, you can contribute up to $20,500. If you are older than 50, you can contribute up to $27,000 for the year.

Speaking of retirement, have your contributed to your IRA for 2021? You have up until April 15, 2022 to make a 2021 contribution to a Roth or Traditional IRA. The contribution limits are the same as last year: $6,000 if you are younger than 50, $7,000 if you are older than 50. If you’re contributing to an employer plan, be sure to check with your financial advisor to find out if contributing to an IRA is a wise move, and which type of account is best for you. Remember, you cannot access funds designated for retirement until age 59 ½. If you do, you’ll have to pay a 10% penalty. If you contribute to a SEP IRA, you have until April 15th (or whenever you file taxes) to make your 2021 contribution.

Next, ask yourself if you have a savings reserve with a balance adequate to meet your core expenses for three to six months? Not surprisingly, many people increase their spending in December and dip into their accounts. If your cash accounts look a little low, devise a plan to start building them back up. Small changes in your daily spending habits, can make a big impact at the end of the year.

Do you anticipate any extra expenses this year? Are you paying for education or planning a home renovation? Do you anticipate a large tax bill in April? Do you know how you will pay for those things? You might consider setting aside those dollars now so they will be available when needed.

If you’re working, you’ve probably already received your W-2. You’ll likely receive notices over the next month or two for other tax documents. Start gathering your tax information now in one place so the documents are easy to find and access. A manilla envelop or file folder can be a great place to keep these documents as they get delivered to you. Take note of those accounts that send documents electronically and set aside time to go online and download them. Having everything in one place will make it easier and save time when it’s time to do your taxes.

Are you systematically saving? If you received a raise last year or expect one this year, think about increasing your monthly savings. You might consider setting up an auto transfer from your paycheck that goes directly to an account you don’t access regularly. Depending on your goals, it may make sense to set up a systematic transfer to fund an investment account. Now’s is a great time to take inventory of where your money is going and allocate dollars to pay yourself first.

Of course, there is always the possibility that you haven’t set any goals yet, or you’re not sure where to start. If that’s the case, don’t worry, a conversation with your financial advisor is always welcome. The professionals at Beyond Financial Advisors are happy to talk through your priorities and hold you accountable.


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