With the tax-filing deadline behind us, now is a perfect time to get your financial house in order. Like other aspects of our lives, our finances can get a bit messy if we don't take the time to straighten them out from time to time. The good news is that it doesn't take a lot of time to make sure you have your financial ducks in a row.
So here are 10 quick action items to help you spruce up your finances:
1. Retirement Contributions: Whether you save for retirement in a 401k, IRA, or both, make sure you are making the most of these tax-friendly accounts. Ideally, your 401k contributions should be at least enough to take full advantage of your employer's matching contribution, if any. And if you qualify for a Roth IRA, making a monthly contribution can be easier than waiting until the last minute to make a larger investment.
2. Rebalance Investments: Over time even a perfectly tuned asset allocation needs attention. As one asset class rises and another falls, your investment portfolio can change in unexpected ways. Now is a good time to make sure your actual asset allocation is consistent with your investment plan.
3. Easy Budgeting: Tracking every dime you spend can be a real drag. Fortunately, there are programs and websites that can make money management a snap. Two of my favorite budgeting tools are Mint.com and You Need a Budget.
4. Emergency Fund: The first step toward financial freedom is an emergency fund. Whatever goal you've set for your fund, make sure you continue to save for a rainy day. And if you have your money in an account that pays no interest, consider a high yield savings account as an alternative. While today's rates won't make you rich, they will provide some return on your cash.
5. Big-ticket Purchases: One of the hardest aspects of any budget is dealing with periodic expenses. Whether it's the cost of a yearly vacation or quarterly insurance payments, it is easy to forget about these occasional expenses until it's too late to plan. So plan now. Add up all your big purchases for the next year, divide by 12, and save that amount each month.
6. Comparison Shop: With the help of the Internet, comparing auto, life, home, and even health insurance takes just minutes. And the potential cost savings are significant. If you do find lower cost insurance, see if your current insurance company will match the lower premium before making a switch.
7. Rethink Coverage: One way we've saved money is by adjusting our deductible on both our homeowner's and auto insurance policies. While raising your deductible does increase your potential out-of-pocket costs, it can also lower your premiums significantly. Similar, evaluate whether you need as much coverage as you have. Lowering the amount of life insurance or the types of auto cover, if appropriate for your situation, can save a lot of cash.
8. Consider Refinancing: Refinancing your home mortgage or even your auto loan can be an easy way to save thousands of dollars. Interest rates are still at historic lows, so check out current rates and see if a refi makes sense.
9. Reduce Credit Card Interest: Interest on credit card debt is often an unnecessary expense. There are plenty of zero percent balance transfer offers available that will allow you to pay no interest for up to 18 months. And some of the balance transfer offers are free, meaning there are no balance transfer fees. Not only can these offers save you money, they can also decrease the amount of time it takes to climb out of credit card debt.
10. Check Your Credit: Finally, it's a great time to check your credit report for errors. You can get a free copy of your report from annualcreditreport.com. And if you want to see your credit score, there are plenty of ways to get your credit score for free.
DR is the founder of the popular personal finance blog The Dough Roller, and the credit card review site Credit Card Offers IQ.
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