Though it is already the new year, it is never too late to start a new resolution or aim for financial goals by Aubrey Lovegrove, especially when it comes to your finances. Here we plan discuss more regarding some aspects of finances that you may want to consider creating a goal for or improving.
The first aspect in your finances you may wish to start or improve on is to increase how much you contribute to your federal Thrift Savings Plan (TSP). The maximum contribution limit was increased from $500 more to $19,500.
Those that would be turning 50 or older this year will be eligible for catch-up contributions on top of your standard annual contributions, which allows you to contribute $6,500 more. This is also a $500 increase from last year’s $6,000 limit.
Another thing that may be in your best interest to do is to sit down and go over your budget. If you don’t have one, start one. Then review what can be adjusted to lower your spending to save you more money.
A goal, if you do not have one already, is to create an emergency fund. Many experts recommend having 3 to 6 months’ worth of funds in case you run into a situation where income is not continuously coming in, such as not having a job.
Many Americans are not able to cover a $400 emergency expense without borrowing money or using credit. Some will tap into their IRAs to withdraw or take out a loan that can negatively impact you in the future, such as facing a 10 percent penalty tax for prematurely withdrawing or losing compound interest for taking out money from your account through a distribution or a loan.
It may also be a good idea to put money into IRAs for last year and this year. To make 2019 contributions to IRA accounts, you can do this until the 15th of April of this year.
The 2020 contributions were able to start at the beginning of the year as well.
Also, for those that are turning 50, you can contribute $6,000 and an additional $1,000 at the beginning of the year. Also, contributing to your TSP does not affect you from investing money into an IRA.
It may also be a good idea to review and adjust your TSP balances if they grew to be misproportioned. You can balance this account by making an inter-fund transfer.
Another good financial idea is to set up a savings account for educational costs. You can do this by putting money into a 529 plan or a Cover ESA for your offspring or their children. Doing this may allow you to receive a tax deduction.
If you have a flexible spending account (FSA), be sure that you don’t just have money sitting in it but to invest it for potential earnings.
Another essential thing to review is the coverage of all of your insurance policies. This would include your home or rental, health, life, disability, and long term care. This could help you realize that you may need less or more insurance coverage to keep you protected.
Also, be sure to keep in mind that there is no need for an open season to make alterations to your Federal Employees Group Life Insurance coverage, also known as FEGLI. Retired and current workers can change their plans, such as canceling or reducing their coverage, whenever they wish to.
If you can do more than one item listed in this article, then great job for taking a proactive stance on your financial life.