I want to be outside this time of the year as much as I can, as I know these beautiful summer days won’t last for much longer.
So if the last thing I want to do is be inside, thinking about All Things Financial; I suspect it’s the same for you.
But there are 5 very easy things to do right now that could fine tune your financial picture, and they are relatively painless and quick.
1) Health Savings Account. If you and your family are healthy and have healthy lifestyles and habits, this could be a great account to open during your employer’s Open Enrollment (traditionally during the month of December).
An HSA (combined with a High Deductible Health Plan) allows you to have a funded account with pre-tax money that is yours (just like your 401k is yours), that you contribute to on a frequent basis (payroll deduction if it’s an employer plan), that builds through time and can be used for future health care needs.
Why think about this now? Because now is a great time to get this information from your Benefits Department and you will have 3 months to mull it over. That’s plenty of time to make sure this is the right decision for you and your family and to make sure you have all the information you need to make an informed choice.
2) Increase your Retirement Contribution by 1%. This one is so easy and fast but the impact to your financial future is enormous. It’ll take you no time at all to log in to your account and increase the contribution by 1%.
Already at the $16,500 annual maximum ($21,500 if you are 50 or over)? Then increase or open an IRA (Roth or Traditional, whichever makes sense for you) and start funding it with at least $100 a month (the idea is just to get started).
3) College Savings Plan (529 or other). If you have children and have already started a plan, congratulations! Now increase your contribution by $100 a month.
But don’t beat yourself up if you haven’t opened a plan yet. Just find a plan that has low costs and funds with low expense ratios, and decide on a monthly contribution amount ($100?) and contribute to it monthly.
Again, the idea is just to get started and to make it a habit; modifying amounts once the habit is in place is easier than getting the habit established.
4) Home Refinance. If your loan is in the mid 5% range or more and if you are not underwater on your home value, consider picking up the phone and talking to your local credit union or bank (they have better rates, in general, than the big banks because they want your business).
Rates for fixed mortgages have never been lower ever. And if you are fortunate enough to have good equity in your home and have no other debt except your mortgage, consider a 20 year loan or a 15 year loan. Your monthly payment will be higher, but your rate will be lower and you will be paying your principal down faster.
The paperwork and the process is a bit cumbersome, but the decision itself should be pretty easy to make.
5) Get Umbrella Liability Insurance. Already have it? Good job! Don’t have any? Call your homeowner’s insurance agent and get a quote (it’s incredibly cheap insurance) and buy it. Really, this one is pretty straightforward and a great value, as you get alot of protection for very very little cost.
So there it is. These are some very easy, quick things to do that should lead to an improved financial future for you, will allow you to enjoy the rest of your summer, and get you ahead of the game.
I trust you understand that I am painting with broad brushstrokes by giving you these tips, and that, of course, without knowing anything about your financial situation or goals, they are just intended as high level ways to help you realize your financial goals.
(Disclosure: I am a Fee-Only Financial Planner)