SHERMAN, Tex. (KXII) - 1. Spring is here according to the calendar. And with Spring usually comes spring cleaning, and that includes cleaning up your finances as well. What advice do you have?
• First, get organized! Do you keep track of your expenses? If not, you should consider that first. There are several software programs you can use so you can see where your money is going and make adjustments as need be. Seeing the total picture of your finances can allow you to set a budget and manage your money.
• Second, de-clutter! If you are keeping old bills, bank statements and tax documents more than seven years old, it might be time to shred them. And try and make sure the important financial documents you do have are in a safe place like a fire proof safe.
• Third, review your credit report. You are entitled to a free annual report. Go to www.annualcreditreport.com.
2. Many Americans may also be getting a tax refund this spring. What should they do with that?
• The first thing to consider is paying down any debts. So, you may want to pay down the debts with the highest interest rates. For some people, that would be credit cards. Next, contribute money to an emergency savings fund. And it can be a good idea to save it! You can deposit your refund into retirement accounts – like a Roth IRA (individual retirement account).
3. You also say spring is a good time to review your retirement accounts?
• Since there has been some volatility in the stock market in 2018, it might be a good time to make sure your investments are still appropriate based upon your current financial situation. Depending on your age, you may want to make sure you have the correct allocation of stocks and bonds in your retirement accounts. It's a good idea to work with a financial professional, if you aren't already.
4. When should someone start thinking about estate planning – or for those who already have, how often should they review their plan?
• When you start having a family and establishing common goals, you may want to consider also thinking about estate planning. It can be important to try and make sure those goals are carried forward if you're not able to communicate those decisions.
• We usually recommend our clients dust off their plans as frequently as once a year. They should make sure their plan still aligns with their goals.
5. What are some commonly overlooked aspects of financial planning?
• The closer you are to retirement, the more your focus changes from making money to preserving your money. This could be a good time to be thinking about changing the financial tools you use to manage your money.
• Another area that tends to be overlooked is in tax planning – are you being efficient with your money? Changing your approach early on can potentially result in benefits down the road.