San Diego (PRWEB) January 13, 2015
According to a recent Bankrate.com study, more than 60 percent of Americans don’t have enough funds to cover unexpected expenses, such as emergency room visits or car repair. While consumers appear to be budgeting more than in previous years, there still isn’t enough money saved to address such sudden costs, which can significantly impact a household’s financial well-being.
As we turn the page to 2015, many are exploring resolutions and putting financial health at the top of their list, along with fitness, health and spending more time with loved ones. Taylor Schulte, CFP®, CEO of Define Financial—a San Diego-based independent, commission-free firm, specializing in financial planning and wealth management—notes that, while many set financial goals at the beginning of the year, most may not fulfill those goals due to a lack of a concrete plan or not knowing where to start.
“Just thinking about improving your finances and cutting out your morning coffee run isn’t enough,” said Schulte. “If you really want make changes to your personal finances this year, it’s important to write down a plan and know how to tackle each area. There are a number of small things you can do that will generate great results. Jot them down on a to-do list and cross each item as you complete it. You’ll be surprised how quickly it all adds up.”
Schulte offers four practical tips for individuals and families to improve finances in 2015:
Increase 401(k) Contributions—the limit on employee contributions to a 401(k) plan will increase to $ 18,000 in 2015. For those participants over 50 years old, the limit will increase to $ 24,000. Take advantage of this opportunity and elect to increase your contributions starting in January. This will reduce your taxable income and increase your retirement savings. And if you haven’t started contributions, now would be a good time!
Review Debt—contrary to analysts’ predictions, interest rates have remained low for an extended period of time. With rates at historical lows, the trend might not last much longer. If you haven’t done so already, review your current debt obligations and see if there is an opportunity to restructure them at a lower rate. This includes credit card debt, home loans, auto loans, and even student loans.
Reduce Fees—every fee you pay means less money in your pocket. Banks are often changing their rules and you might be surprised to learn you are paying a fee for something you previously received for free. Sites like Mint.com will help you track the fees you are paying and alert you when a fee has hit your account. Challenge yourself and see how many fees you can reduce or remove this year. Consider re-investing the dollars saved into a savings or retirement account.
Review Your Investments—take a close look at your investment portfolio. When contemplating a change in your portfolio, don’t forget to consider how long you’ve owned each investment. For instance, assets held for a year or less generate short-term capital gains, which are taxed as ordinary income. Depending on your tax bracket, your ordinary income tax rate could be much higher than the long-term capital gains rate, which applies to the sale of assets held for more than a year.
“Everyone has a financial goal in mind—whether it’s accumulating wealth, saving for college, preparing for retirement or taking a year-long trip around the world,” said Schulte. “It’s easy to put finances off, but doing so doesn’t get most people to their goals. Taking small actions, however, such as bumping up your 401(k) contribution or reducing fees can go a long way to getting finances on the right track to achieve those objectives.”
About Define Financial
Define Financial is a San Diego-based independent, commission-free boutique firm, specializing in financial planning and wealth management for individuals and small businesses. Founded in 2014 by Taylor Schulte, CFP®, CEO, Define Financial provides objective, conflict-free advice, and prides itself on its progressive and forward-thinking culture and personal approach. Its comprehensive financial services portfolio includes investment, retirement, tax and college planning, charitable giving and insurance services. For more information, visit: http://www.definefinancial.com.