Financial Advisor in Raleigh NC: Clean Up Your Financial Closet
See tips to take action now to better organize and plan your financial life.
Many people find that cleaning and organizing their home can be soothing as well as productive. Decluttering, dusting, and scrubbing can breathe new life into your home and help you feel more relaxed.
The same can be true for cleaning up your finances. Here are some tips to help you get better organized, feel empowered, and take control of your financial future.
Review Your Spending and Savings
Rising prices have hit many consumers right in the pocketbook. Prices have been painfully high for months and that means most of us are spending more on essential daily expenses, which could lead to saving less or even running up debt.
To get through this period of inflated prices, it can make sense to go back to the basics and take a close look at your budget. Just reviewing your spending for the past month or 2 could uncover some ways to keep more of your money in your pocket. You may have recurring memberships or subscriptions that you’ve forgotten about or there may be other leaks in your cash flow that could be fixed with relatively little pain.
Revisit Your Investing Strategies
The surge in inflation highlights the importance of investing for growth potential.
When was the last time that your portfolio had a regular checkup?
If you're not sure about how recent market activities have changed your mix of stocks, bonds, and cash, check your asset allocation. Or connect with a financial advisor or financial planner to see if you have a diversified mix of stocks, bonds, mutual funds, ETFs, cash, and other investments that are aligned with your overall investment and retirement goals.
Time to rebalance?
Even if you have an investment plan in place, it's a good time to review it. A 60/40 stock/bond portfolio could be off your target allocation by 5% to 10% due to the recent market drop. If your asset mix has shifted significantly from your target, consider rebalancing or making contributions to gradually get back to your target asset allocation.
Not comfortable doing that on your own?
Consider meeting with a financial professional who can help you rebalance.
Don't have a financial plan and target asset mix?
Now's a good time to get one. And there are lots of options ranging from a financial advisor to a financial planner.
Get Tax-Smart
Looking for tax-free growth potential and tax-free withdrawals in retirement?
Then consider a Roth IRA or a Roth IRA conversion. Not everyone can contribute to a Roth IRA because there is an income limit. But it's still possible to have a Roth IRA—by converting money in a traditional IRA or other retirement savings account.
Did recent market moves create tax planning opportunities for you?
Consider the potential of tax-loss harvesting to help lower capital gains taxes. Tax-loss harvesting allows you to sell investments that are down, replace them with reasonably similar investments, and then offset any realized investment gains and a small portion of ordinary income with those losses. The end result is that less of your money goes to taxes and more stays invested and working for you. The rules can be complex.
If you have a financial advisor, they may already be doing your tax-loss harvesting. If you're doing it yourself, it's always a good idea to consult a tax professional.
Lastly, another tax-savvy savings option to consider: maximizing the use of health savings accounts, if available.
Check Insurance Coverage
Do you have the proper insurance coverage to protect your family?
In addition to reviewing your homeowners/renters and auto policies, consider adding affordable personal liability umbrella coverage which protects against the potential financial fallout of certain types of unforeseen events that lead to property damage or injury, for which the policyholder is held responsible.
Maximize Company Benefits
Are you making the most of your employee benefits?
You may be leaving money on the table if you aren’t.
Find out if your company offers tuition reimbursement, student loan relief, disability insurance, FSAs for dependent care, vision or dental coverage, or even pet insurance.
Take advantage of the benefits that make sense for you, especially the ones that do not require a financial outlay on your part.
Some employers help workers transition into retirement and offer benefits such as financial coaching, and the ability to move to part-time work or a flexible schedule.
Credit Cards, Mortgages, and Student Loans
How's your credit?
Good credit can help you qualify for lower interest rates to help finance things like cars, homes, and other necessities. It can also help you get lower car insurance premiums.
To start, know your credit score: annualcreditreport.com offers a free review every year. Check with your credit card company; they may also provide free access to your FICO score.
Need help with student loans?
The CARES Act suspends payments on federal student loans and waives any interest on the loans through the end of August 2022. You may continue to pay down principal and benefit from the 0% interest rate.
Estate Planning and Other Important Paperwork
Creating an estate plan is a great accomplishment. But it’s not a plan that should sit around gathering dust. Indeed, you'll likely need to update your plan regularly so that it continues to reflect your wishes and needs, which may change along with your family and finances.
Also consider updating your beneficiaries. Most financial accounts, such as insurance policies, retirement savings accounts, or brokerage accounts, require you to designate a beneficiary, and these beneficiary designations typically trump any directions in a will.
The estate planning process is a good time to make sure you've identified beneficiaries in each of those accounts, and to consider whether those beneficiary designations mesh well with your overall estate plan.
Organizing and Storing Financial Documents
Like insurance, good record-keeping is one of those things that pays off when you really need it.
If you don’t already have one, consider setting up a filing or other record-keeping system. Keeping important documents (birth and death certificates, living wills, insurance policies, power of attorney, and other financial information) in good order and easily accessible will be helpful to you, and it can also help your family in a worst-case scenario.
If you need help in getting and staying organized financially, it may be a good time to consider working with a financial advisor or financial planner.
Sources:
https://www.fidelity.com/learning-center/personal-finance/estate-planning-learning-path
https://www.nerdwallet.com/article/investing/retirement-planning-an-introduction
https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-
center/publications/top-10-ways-to-prepare-for-retirement.pdf
Disclosures:
This site may contain links to articles or other information that may be on a third-party website. Advisory Services Network, LLC is not responsible for and does not control, adopt, or endorse any content contained on any third-party website.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.
Rebalancing investing involves risk including loss of principal. No investment strategy, such as rebalancing, can guarantee a profit or protect against loss. Rebalancing investments may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events will be created that may increase your tax liability.
