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Why You Should Review Your Finances at the Beginning of the New Year

Gina Magaly Rodriguez February 21, 2024


Tackle Your Debt

Make a list of all your credit card and loan balances, as well as their interest rates. Compare your current credit card debt to what it was a year ago. If you haven’t made significant progress toward paying it off, or if your debt has grown over the past year, make a plan to reduce or eliminate it.
You might want to pay off the balance with the highest interest rate first or start with the smallest balance, pay it off, then move on to the next-highest balance. You can also use a balance transfer or debt consolidation to reduce your interest charges.

Review Your Retirement Account

If you have a 401(k) with a match through your employer, you should contribute enough of your own money to get the full match. If you didn’t do that last year, make an effort to do it this year.
Review your mix of stocks, bonds and other investments and figure out if your current investment strategy is still right for you. As you get closer to retirement age, you will want to gradually move from riskier investments, such as stocks, toward safer investments, such as bonds.

Plan for an Emergency

A job loss, car repair or medical bill can take a major toll on your finances if you’re not prepared for it. Those types of things can happen at any time, which is why it’s vital to have an emergency fund. If you don’t currently one, start transferring money from each paycheck to a savings account. If you do have an emergency fund, check your current balance and figure out if you need to boost your savings rate this year.

Review Your Spending

When you look closely at your purchases and recurring bills, you might realize that you’re wasting quite a bit on things that you don’t need or that you could get the same products and services at lower prices. For example, you might be spending a significant sum each month on coffee, takeout meals and subscriptions that you rarely or never use. Cutting back or eliminating those expenses can free up money that you can put toward paying off debt, investing for retirement or saving for an emergency.
It’s a good idea to periodically shop around and compare rates for auto and homeowners insurance. You might be able to get the same coverage with lower premiums by switching companies, bundling policies or inquiring about discounts.
Contact your internet and cell phone providers and find out if you’re eligible for lower- priced plans. If you’ve been a loyal customer, you might be able to get a discounted rate simply by asking.

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