Welcome to April 2013. To celebrate the fact that we’ve already burned through a quarter of the year we put together a list of Financial Tips that will help you in all areas of your financial life. We think that you will agree that you can never have too many financial tips, especially when they come from us because you know that our tips are the best. (That’s why you keep coming back for more, right?) All kidding aside, what we have for you below are some of the best tips that we know of to help you save more, invest wisely and end the year in good financial shape. With that in mind let’s get started. Enjoy.
Every financial plan starts with tracking your expenses. The reason is that, if you don’t understand where your money is going, it will be almost impossible to change the way you spend it and make better choices. We don’t necessarily recommend a specific software program but there are plenty of them out there and, when it comes right down to it, you can also use a plain old spreadsheet.
One of the best ways to protect yourself from unfortunate circumstances is to make sure that you have adequate emergency reserve funds. A good recommendation is to have 6 to 12 months of liquidity available to help get you through any financial emergency. For older folks and those in retirement we actually recommend having 12 to 24 months’ worth of cash set aside.
While we know that interest rates are low we also know that there are plenty of ways to squeeze a little extra money out of your investments. Longer-term CDs with low penalties are all over and you can also shop around for better interest rates that credit unions offer. The US government also issues what they call ‘I bonds’ which we think you should consider.
A company called Vanguard can help you get a handle on your risk tolerance so that before you make any big changes to your portfolio you can get a risk assessment using their online questionnaire. Once you do this you will have the information that you need to rebalance your portfolio in a way that is more consistent with your needs.
It’s been said that the person who represents them self in court has a fool for a client. While we agree with that, there are some people that can manage their money quite well. If that’s not you or you don’t have the time, energy, financial acumen or temperament necessary to do that you should consider letting someone do it who is a professional. The national Association of Personal Finance Advisors is the place we recommend starting.
If you’re trying to beat the market we recommend that you stop. Research shows that only one in five mutual fund managers has beaten the index over the long run which tells us that investors would be wise to replace individual stocks and managed mutual funds with index or exchange traded funds instead.
One of the most important things that you can do this year is to calculate your retirement number. The fact is that, even though many people say they are worried about their upcoming retirement, very few have done anything to start planning. One of the best ways to get started is to calculate how much you’re going to need to remain financially secure. There are many tools that can help you do this to be found online.
If you haven’t already done so you should start maximizing your retirement contributions as well. The 2013 limit for 401(k)s and most other plans has been increased as well as the government’s Thrift Savings plan. We recommend that you take advantage of these increases while you can.
Many people who are renting should consider buying a home as the real estate market continues to recover. This is a very big step however and should be entered into with as much caution as possible.
If you already own a home refinancing your mortgage is a great idea because mortgages are at historically low rates right now but are beginning to rise. There are several refinancing calculators online that can help you determine how much you’ll be able to save if you do refinance.
One of the most painful lessons for homeowners in 2012 was Super Storm Sandy and it has forced people to assess their property insurance. Even if you don’t live in the path of super storms on the East Coast we recommend that you do this at least once a year so that you’re prepared before you lose everything rather than after.
And there you have it, the very first financial to blog of April 2013. We hope that you enjoyed it and that some of the tips that we gave you will help you to put your financial ship on course for an excellent year. Make sure to come back and join us soon for more. See you soon!