New Year Review: 10 Tips for Prepping Your Finances for 2019

Jacqueline Runnberg CFP®, First Vice President Wealth Advisor 

The new year is here, and it’s time to start looking ahead. Whether your hope for 2019 includes a new home, vacation, retirement or a new addition to the family, it’s a good time to pause and make sure your finances are aligned with your plans.

Financial Actions to Take Now

Each year, we work through a checklist with our wealth management clients to make sure whatever the new year brings, they’re financially prepared for it. Here’s what’s on the list.

#1: Check your emergency savings balance. Since this money is used now and again, it may need replenishing. Also, if your family’s situation and expenses have changed over the past year, revisit your target balance to make sure it’s sufficient.

#2: Compare expected income to expenses. Examine your household’s expected monthly income for 2019 in relation to your anticipated expenditures to see if any adjustments are needed. With the increases in inflation and real estate taxes in many area suburbs, it’s a good time to review the family budget.

#3: Look at your account statements. Volatility in the investment markets during 2018 could have caused your asset allocations to shift. Make sure your portfolio reflects your long-term needs and your tolerance for risk. If it doesn’t, rebalance it to a point where you can sleep comfortably at night.

#4: Preview your 2018 tax bill. The best time to think about the taxes you’ll be paying in 2019 is in 2018 while you still have an opportunity to reduce them. See if you can harvest tax losses in order to offset any capital gains you’ve taken throughout the year. Also, check to make sure you’ve been withholding enough to cover what you will owe in April to avoid penalties.

#5: Calculate your net worth. Knowing where you stand today and comparing that to where you want to be next year, in five years or by the time you reach retirement helps you assess your progress toward your goals. Adding up assets while subtracting liabilities is the quickest way to develop a financial road map.

#6: Reevaluate retirement plan contributions. Speaking of retirement, as you start 2019, look at where your retirement plan stands. Depending on how much longer you’ll be contributing toward this goal, you might want to make adjustments.

#7: Review estate plans, account titles and beneficiaries. Family circumstances can change from year to year. Make sure your estate plans and the titling on your assets—including 401k, brokerage and bank accounts—continues to reflect your ultimate wishes.

#8: Price shop insurance policies. Insurance is an area where needs and rates can change over time. Request new bids on your auto, life and homeowners’ policies to ensure you’re not paying more than you need to for the coverage you require today.

#9: Revisit your charitable giving strategy. Tax changes that took effect in 2018 may impact when you make gifts to charities. Review your strategy with your tax advisor to make sure you’re being generous as well as tax-smart.

#10: Verify that your legal documents are current. Make sure your will, trust, health care directives and power of attorney documents are current, both in terms of who they name and to reflect changes in the legal and tax codes.

Annually reviewing your finances lets you head into the new year with a better idea of what you want to accomplish and how you will do it. If we can be of any help as you do this or if you want to discuss how to develop a plan for achieving your life goals, give us a call at 630-906-2000 or visit us at https://www.oldsecond.com/wealth-management/wealth-management/. Here’s wishing you a prosperous and joyous 2019!

 

 

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Tips for Keeping Your Financial Resolutions

Joseph Huml, Vice President/Retail Regional Manager huml_portrait

Whether you are among the 41 percent of Americans who typically head into the new year equipped with a list of resolutions or are among those who just want to get your finances in shape, knowing how to move the dial from intent to progress can be tough.[1]

Here are some tips to help you succeed in boosting your financial health in 2017.

  1. Conduct a credit cleanup. Sometimes it helps to clear the slate by consolidating high-interest debt into lower rate loans. Homeowners, in particular, often find financial relief—along with financing for home repairs or unexpected expenses—by using a home equity line of credit (HELOC). Not only is the interest rate on this type of debt more affordable than other types of personal loans, the interest you pay may also be tax deductible.
  1. Join the club. To avoid feeling overextended by holiday spending next January, open a Club Savings Account this January. Arrange to have a small amount ($10–$25) transferred from your checking account with each paycheck. In late November, the accumulated amount will be transferred back into your checking account just in time for you to start shopping for the 2017 holiday season.
  1. Get more than credit. Compare the rates and rewards you receive on your current credit card to see if there are more attractive deals out there. Also, with many issuers offering attractive introductory rates for new accounts, moving your outstanding balances could potentially save you money.
  1. Up your reserve. While having an emergency reserve equal to at least three months of your regular expenses is advisable, it can be hard to achieve. A more attainable goal is to try to build up your emergency reserve gradually. For instance, consider setting up an automatic deposit for a modest amount from each paycheck that will allow you to end up with an additional month’s worth of emergency reserve by year-end.
  1. Experiment with bursts of retirement savings. While it’s hard to hit the maximum contribution limit to your retirement savings account each month, try raising your contribution during the three months a year when your expenses are lighter. These short bursts can add up over time.
  1. Get a second opinion. Take advantage of free investment consultations when they are available. Sometimes, a banker can see a better way to save on fees or interest expenses and may be able to provide insights into ways of allocating your investments for expected market changes.
  1. Improve your score. Review your credit reports and scores at least annually. Since your score influences the interest rates you pay—and even employers and landlords look at them—it’s beneficial to make sure yours is as high as possible. When you review your credit reports, look for any errors or omissions. Pay attention to the timeliness of the payments you do make. Late payments and skipped payments are the biggest detractors to your score.

For more information on how we can help you keep up your resolve to improve your finances this year, visit us here or call 1-877-866-0202. We can’t wait to talk to you about what we can do to help you make this your best financial year yet.

5 Life Events That Benefit From Financial Planning

Kathy Diedrick, First Vice President—Retail diedrick

As you write your life story, there are likely to be chapters that completely change the direction of your narrative. Coincidently, these plot twists often come with financial implications. Getting advice at these points isn’t just helpful, it may be rewarding.

A 2010 study found that people who get advice regularly before making major decisions related to money end up with more financial assets than those who go it alone. So, when would seeking financial advice help?

Here are some of the bigger turning points in life, when some guidance can make all the difference.

Your first full-time job. For many, the thrill of a regular paycheck comes from knowing you don’t have to ask permission—it’s your money to spend as you please. But, before you do, it’s a good idea to take a breath, step back and add up what you need to spend each month. Then, think about what you want to spend on the things you do or buy for enjoyment.

It’s also a good idea to get in the habit of shaving off a little bit from each paycheck to start saving for the things you are going to want, like an annual vacation, getting an advanced degree, upgrading your car, owning your own home and, ultimately, retiring.

Talking to an advisor about the best options for living today while saving for tomorrow can help you get off to a good start. Making use of spending tools also helps.

You found the ONE! Making a commitment to share your life is huge, whether you find that person early in your adulthood or later on. It also means that when you start to live life as part of a couple, you should start spending, saving and planning as one. An advisor can help facilitate that transition by advising you on how to jointly own and hold title to your accounts and assets. They can also work with you to set up new savings goals. Calculators like this one can also help you keep track of things as your finances become more diverse.

Buying your first home. While you save for a down payment, you may want to work with an advisor—as well as a mortgage expert—to determine how much house you can afford and if there is a need to address your current debt and credit scores before applying for a mortgage.

Children change everything. From what you spend your money on to what you care about, when you start adding family members, it’s time to reevaluate. For many new parents, saving for college becomes an important goal. While our college savings calculator can help you set a target, an advisor can help you choose the right goal and savings method for your budget, along with a mix of appropriate investments.

Preretirement. The time to consider your plan for retirement is when you’re still working. This way you can make necessary adjustments before locking into any decisions. This tends to be the point in most people’s lives where they really want to meet more regularly with an advisor to make sure their savings are sufficient and their investment allocation makes sense.

No matter where you are in your life, we have the accounts, tools and individuals to support you on your financial journey. Contact us at 1-877-866-0202 to see how we can help. And, feel free to make use of our many financial tools along the way. We’re always happy to talk to you about what you want to do next.