New Year's is traditionally the time to review your life and make resolutions for change. In addition to thinking about working out, eating healthy, and meeting personal and professional goals, you should also think about your finances. To make the most of the New Year, keep the following tips in mind.
1. Outline New Goals
To ensure you're moving in the right direction, take some time to outline your goals. Think about long-term goals such as buying a home, sending the kids to college, or retiring by a certain age, and consider reaching out to a financial professional to get help creating a path toward those goals.
Also, think about your short term goals. What do you want to accomplish this year? Do you want to save a certain amount of money? Expand your business? Reduce your spending so you can afford a vacation? Regardless of what you want, make a plan to get there.
2. Review Your Expenses
When you're thinking about finances, you always need to consider two sides of the equation — spending and earning. Set aside some time to review your expenses and identify areas you can make cuts. Depending on your situation, you may want to skip buying lunches, or cancel some of your streaming services. You should also take some time to review your cell phone bill, insurance premiums, and similar expenses. Once you’ve made an assessment, considering shopping around to see if you can get a better deal.
3. Update Your Tax Deductions
Do you anticipate owing tax this year or getting a refund? If so, you should update your tax deductions. To do so, just ask your employer for a new Form W-4 and make the necessary changes. If you're self-employed and want to avoid an end-of-year tax bill, create a budget that allows you to make larger quarterly tax payments.
The reasons for avoiding a tax bill are obvious, but you may be wondering why you should avoid a refund. Essentially, if you're getting a refund, you're lending the government your money on an interest-free loan. If you receive those funds in your paycheck, you can save or invest them to hopefully yield a return and ultimately have more than you would otherwise.
4. Create a Realistic Budget
To help you move toward your goals, you need a realistic budget. Look closely at your income and expenses, and decide how much you want to spend and save every month. But make sure you're being realistic. If your budget is too severe, you may struggle to meet your goals. To ensure your budget is manageable, always remember to include a little extra wiggle room and some money earmarked for fun.
5. Leverage Tech Tools
Consider leveraging tech tools to help you stay on pace with your New Year's resolutions. For instance, you may want to look at a budgeting app that syncs with your bank account and alerts you when you've overspent in a certain category. Or you may want to explore other tech tools — your financial professional may have ideas for you.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.