With Thanksgiving a week away and we begin to waive goodbye to 2018, it’s time for year-end planning. Ken Mahoney of Mahoney Asset Management has outlined the top five financial recommendations investors should prioritize before the end of the year.
1. Set, track and follow a Christmas budget.
With black Friday not far around the corner and Christmas shopping approaching, it is key to budget, track and prepare when shopping to avoid overspending. We often add an extra item to the basket or must have the most recent fashion item, however, these expenses soon pile up. Creating a Christmas list to stop impulse buying and additional unneeded purchases is necessary. If you are planning to spend a significant amount on a one-off item for your spouse or child be sure to negotiate. Many of us are embarrassed to ask or ‘barter’ but having a conversation with the sales associate to uncover ways to save is advised. Whether it be 20 or even 10% off, it could be the easiest $100 you save.
2. Check-in with your financial adviser before the end of the year.
With high market volatility and economic changes occurring this year, it is important to review, re-balance and update the goals of your portfolio. Sitting down with your adviser to discuss taking some money off the table or re-allocating to be diversified can help prepare you for a prosperous 2019. Measuring risk and reward levels is vital to ensure your financial strategy is correct, and with such a roller-coaster of a year, there is no time like the present.
3. Update beneficiaries and review account information.
Being sure that account information and beneficiaries are correct is something that regularly gets overlooked. A lot can change in a year (or since you opened an account or took out a policy!) so reviewing who you have in line to receive your assets as well as information regarding address, phone numbers and online access are important to make sure everything runs smoothly.
4. Build an emergency fund…
If you haven’t already, starting an emergency fund is recommended. Unforeseen events can occur which will impact your financial life, for example, car accidents, house repairs, sudden illness or delayed pay checks can force an individual to source external funds which can create further solvency issues. Putting some money away each month is wise and, in all honesty, will hopefully never be touched. Preparation to a sound financial life is pivotal.
5. Hit the contribution limits for 401K and IRA accounts.
Key financial changes will be occurring into 2019 and the most notably for our clients will be contribution limits to retirement and 401K accounts. Limits on employee contributions to 401k, 403b, or 457 plans have increased by $500 to $19,000. Traditional and Roth IRA contribution limits have also increased by $500 to $6000 for 2019. It is important to max out your contributions to ensure you are on track to a healthy retirement, and for 401K’s many employers will match a portion of your employee contribution, up to a certain amount.