The new year is fast approaching—which means that it’s a great time to set goals aimed at improving your finances. From increasing your debt payments (which will save you quite a bit in interest over time), to taking steps toward building an emergency fund, there’s a lot of upside to setting new goals for 2021.
Create and stick to a budget
Do you want to save more money? Take some time to evaluate how much money you have coming in, what your expenses are, and what you’d like to save (and/or invest). If you’d like to increase what you’re putting away for retirement, speak with your CPA about strategies that can help you do that.
Plan for big-ticket expenses now
If you know you have a big expense that’s on the horizon, such as college tuition, a new roof, or a down payment for a house, put it aside now. You’ll also want to make sure that sum is liquid, meaning you’ll want to ensure you have access to it when you need it. Short-term certificates of deposit, money market funds, or a separate savings account can help you keep the money separate, but accessible.
Expand your emergency fund
When it comes to your financial situation, it’s always best to “prepare for the worst,” just to be on the safe side. Most experts recommend creating an emergency fund that can cover between 3 and 6 months of your essential expenses, such as your mortgage, your utility bills, and your car payment. An emergency fund can help prevent you from needing to sell your volatile investments.
Maximize contributions to your tax-advantaged retirement and educational accounts
Tax advantaged accounts include workplace retirement plans, 529s and your IRA. Making your contributions sooner than later can help you benefit from tax-free compounding growth. Contributions to your traditional and/or Roth IRA may be tax deductible. For more information on how making contributions to your tax-advantaged retirement accounts can help reduce your federal income taxes, be sure to speak with a licensed CPA.
Are you ready to start planning for 2021 and beyond?
If you’re ready to get started on your 2021 financial resolutions, we can help. Call Hughes, Snell, and Co., PA today to schedule a free, personalized consultation. Call us today to learn more about how our team of expert CPAs help you plan for a better financial future.