While many make New Year’s resolutions to get physically fit and include more green foods in their diets, financial advisers at Edward Jones want Northlanders to focus on another kind of fitness and green, their financial fitness and money.
In time for January being Financial Wellness Month, Edward Jones recommends the following tips to get readers financially fit in the new year.
• Increase your retirement plan contributions.
“One of the best financial moves you can make is to take full advantage of your 401(k) or similar employer-sponsored retirement plan,” states an Edward Jones release. “If you contribute pretax dollars to your plan, the more you put in, the lower your taxable income will be for the year, and your earnings can grow on a tax-deferred basis. So, if your salary goes up in 2020, increase the amount you put into to your plan.”
The annual contribution limit in 2019, was $19,000 or $25,000 for those 50 or older.
“Have a plan and start investing,” said Edward Jones Advisor Jim Smith, who has an office in Liberty. “It’s amazing how even small amounts add up over time. Plan to increase the amounts every year or whenever you receive a pay raise.”
• Use found money wisely.
“It’s good to invest wisely when you get things like a bonus or inheritance,” said Kearney Edward Jones Financial Advisor Bob Marchert.
“During the course of the next year, you may receive some money outside your normal paychecks such as a bonus or a tax refund. It can be tempting to spend this money, but you may help yourself in the long run by investing it. You could use it to help fund your IRA for the year or to fill a gap in another investment account,” states the release.
• Don’t overreact to market downturns. A common investment mistake, according to Edward Jones, is overreacting to temporary market downturns by selling investments at the wrong time and staying out of the market until things calm down.
“The financial markets always fluctuate, but if you can resolve to stay invested and follow a consistent, long-term strategy, you can avoid making some costly errors,” states the release.
• Be financially prepared for the unexpected. Even if someone is diligent about saving and investing for long-term goals, one can encounter obstacles along the way such as the sudden need for a new car or costly medical bills.
“If you aren’t prepared for these costs, you might have to dip in to your long-term investments to pay for them. To prevent this from happening, you may want to keep sufficient cash or cash equivalents in your investment accounts,” states the release.
Marchert said people should aim to have enough emergency cash available for at least six months of living expenses.
“So if there is an emergency, you don’t have to sell off your investments to cover them,” he said.
Smith said people should try to set a budget.
“Pay your bills first, yourself second, then the remainder is disposable income,” he said.