The holiday season is a once-a-year mash-up of magic and madness, and it can be a challenge to find balance between the two. The moments of wonder with family and friends go hand-in-hand with the chaos of shopping, rushing, eating, and drinking…sometimes to excess. ’Tis the season to be jolly, and the season only comes once a year – so enjoy!
And as you make your Gift List, be sure to treat yourself to something special: the gift of financial self-care. The enjoyment and reward will last longer than anything you can buy in a store.
Get a head start on New Year’s resolutions by setting fresh financial goals for the new year now… and then truly embrace the eat-drink-and-be-merry holiday philosophy – knowing you have given yourself the gift of a path to reach financial freedom.
Financial Self-Care: Three Easy Steps to Begin
1. Automate your savings program.
Avoid the anxiety of wondering if you are saving enough by automatically setting aside money from your income each month. Either set up a transfer from your checking account to your investment account, or contact your payroll department to have dollars sent directly from your paycheck to your investment account.
- These automated savings can be directed to either a taxable brokerage account (unlimited amount), or to an IRA or a Roth IRA if you are eligible.
- This automated savings program will supplement your monthly contribution to a 401(k) or 403(b) – and, if the funds are invested, will have the added benefit of dollar-cost averaging, which tends to boost returns over the long haul.
2. Open your investment account statements – both retirement and taxable – at least quarterly, and review the contents.
Knowledge is power, and the more you learn, the more in control you will feel. “Clueless” is a 1990s coming-of-age comedy, not a way to feel about investments! Things to look for:
- Familiarize yourself with your financial statements, and call your custodian or advisor to ask about anything you don’t understand.
- Is all your money invested, or have you unintentionally left cash in the account that isn’t working for you?
- What is your Big Picture – otherwise referred to as your asset allocation? How much is invested in stocks, and how much in bonds? Are you comfortable with the allocation knowing that a higher percentage of stocks means greater volatility? Conversely, are you content with the level of bonds, knowing the returns may be lower than what you need to reach your goals?
- What is your year-to-date rate of return? How does this measure of investment performance compare with your financial objectives?
3. And, finally do something about those old 401(k)’s you’ve almost forgotten about.
Like the reliable jacket that’s been languishing in the back of a closet, those forgotten accounts are an easy refresh to your financial ‘wardrobe’ – rollover an old 401(k) into your current 401(k) if your plan allows, or into an IRA account. (It’s likely you already have an IRA, so it means receiving one less statement each month/quarter!) If you don’t like to invest, the easiest approach is to roll the old account(s) into your current 401(k), and invest it in your existing choices.
Satisfaction. Empowerment. Confidence.
You know the feelings you get when you finally purge your closet (or even clean just one messy drawer)? Multiply the accomplishment factor by about one hundred, and those are the feelings that result from completing something on your financial self-care check list. Pat yourself on the back – this is a gift that will keep on giving, long into the future.
Now, go out and Eat, Drink, and Be Merry… Happy Holidays.
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