How are your New Year’s goals going? A fresh start for 2025 should include your financial life and your health and wellness resolutions. Beck, Lenox & Stolzer offers money tips for the coming year with this recent article from USA Today, “Start 2025 off right with these 9 money moves”.
Get out of debt. If you have high-interest debt and high-earning investments, you’re only treading water and not getting ahead. Take care of the high-interest debt first if you want to see your net worth grow.
Try living below your means. Too many of us spend more than we bring in and then try to catch up (See “Get out of debt” above). The more significant the difference between what you earn and spend, the better your savings accounts will grow. If you’re saving for retirement and your kid’s education, changing spending from what you want to what you need will help.
Build an emergency fund. Unless you are lucky enough to have untapped wealth, you need an emergency fund in cash ready to pay for at least three months of non-negotiable expenses. This means taxes, housing, food, transportation, medical expenses, etc. Few people are ready to deal with the economic impact of losing a job, having to replace a car, or needing major surgery. Having an emergency fund protects you from needing to use retirement funds or take on debt to deal with a short-term financial crisis.
Revaluate your portfolio. Investing in great companies for the long haul is how most people set their investment portfolios. However, it makes sense to look at a rebalance every now and then. People who are in their high-earning years may be okay with a 60/40 split between stocks and bonds. However, as you get closer to retirement, you may want to change this. After a few years, when stocks grow faster than bonds, your 60/40 split from a few years ago might have become an 80/20 split.
Maximize retirement accounts. If you can make use of tax-advantaged retirement funds, your future self will thank you. Use IRAs and 401(k)s to build long term wealth. If your company has a matching program, make sure to maximize your contributions using what is essentially free money. Your retirement withdrawals will be tax-free, if you can use a Roth account and pay taxes when you make contributions.
Check beneficiary designations. Make a list of all the financial accounts with beneficiary designations and check to see if the people you named to receive the assets on your death are still the right people. This is especially true if you’ve gone through a divorce, moved, or married.
Get your estate planning documents in order. If you don’t have a will, durable power of attorney, healthcare power of attorney, living will, or advanced directive, make an appointment with one of our estate planning attorneys now to get these documents in order. If you have these documents but they are more than four years old, you’ll want to update them to be sure they still reflect your wishes. If you have young children, be sure your will includes naming a guardian.
If one of your New Year’s goals was to get your estate planning and financial life organized, keep it moving! Next year at this time, you’ll be glad you did.
Reference: USA Today (Jan. 5, 2025) “Start 2025 off right with these 9 money moves”
