Check Your Finances Now to Avoid Falling Late Community
Fall is a great time to review your finances as there is still time to make adjustments before the end of the year. The lingering pandemic and economic uncertainty are complicating matters, but financial experts recommend taking a close look at your savings and planning your goals for 2022 now.
Many government programs, including supplemental unemployment assistance, suspension of federal student loan payments, and child tax credit advance payments, are set to expire in 2022 or earlier.
“People are starting to pay for things again,” said Malcolm Ethridge, a certified financial planner and host of the Tech Money Podcast.
Here are some financial tasks to do this fall:
ACCELERATING SHORT-TERM SAVINGS
Ethridge suggests preparing now for the phase-out of government benefits: “The people who have been given a moratorium on your student loans, are using those extra dollars in your pocket to pay off credit card debt so you don’t have to. not have to pay for both at the same time, ”he said. . “We will find out that we are not as rich as we have thought for a year and a half.”
Ethridge also recommends building a cash stack. “We have no idea what next year will look like,” he said. Having cash on hand allows you to deal with unforeseen expenses as well as potentially take advantage of investment opportunities.
If you’ve undergone any major changes in the past year that could impact your tax situation, such as moving to a new state, getting married or divorced, or changing jobs, you may want to consider talking to a tax professional. . now, before their busy season begins in the new year and they are overwhelmed.
“They work long hours and focus on processing spring tax returns, and now is not a good time for them to dig deeper into your situation or give you strategic advice,” says Angela Moore, CFP and founder of Modern Money Education, which offers online personal finance courses for women.
“This is a good time to think: Did we do what we said we were going to do? »Says Christine Centeno, CFP and founder of Simplicity Wealth Management. She recommends reviewing your savings and spending over the past six to 12 months so you can make the necessary adjustments.
Open enrollment, where employees can make choices related to health insurance and other benefits like life insurance, also tends to take place before the end of the year.
Centeno suggests carefully considering your options before making a final choice and considering any additional insurance needed, such as disability insurance or life insurance. Also make sure that the listed beneficiaries are up to date. “People are feeling more urgent to put things back in order” because of the pandemic, she said.
TOPPING UP RETIREMENT CONTRIBUTIONS
“See if you can increase your pension contributions and maximize them before the end of the year,” says Moore. You can continue to contribute up to $ 19,500 to your 401 (k) until December 31; if you are 50 or older, you can contribute an additional $ 6,500 for the year. Roth IRA or IRA contributions can continue until the April 15 tax deadline.
If you are lucky enough to have already maximized your pension contributions for the year, you will notice that your paycheck is higher because these deductions are no longer taken. Ethridge suggests looking at additional savings options such as putting money into after-tax savings accounts or college savings for kids. Vacation spending also hits the end of the year, so setting aside some money for that is another good idea.
Lazetta Rainey Braxton, CFP and co-CEO of 2050 Wealth Partners, says some people are also thinking about job changes right now.
“For a lot of people, they don’t want to go back to work in person, so they’re looking for new jobs,” she says. If so, you may need to put some money aside for a job transition, especially if it could mean lower pay, she says.
Other big goals for 2022 could finally include taking a vacation that was postponed earlier in the pandemic or renovating a part of your home that you spent so much time in. “The sooner people say what they want and put it on the table, you can put that money aside to be ready,” says Braxton.
Part of that planning also means preparing for continued economic turmoil, warns Frank Par e, CFP and chairman and managing partner of PF Wealth Management Group.
“If something happens, like the market reservoirs tomorrow, money should be set aside for your short-term goals so that the uncertainty doesn’t affect you,” he says. That way, he says, you can always pursue your plans, whether it’s finally retiring or taking a trip delayed by a pandemic.
This column was provided to The Associated Press by the NerdWallet personal finance website. The content is for educational and informational purposes and does not constitute investment advice.
Palmer is a personal finance expert at NerdWallet and author of “Smart Mom, Rich Mom”. Email: [email protected] Twitter: @KimberlyPalmer.
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