7 Ways to Get Ready for a Financially Healthy New Year

Use a Year-End Financial Checklist

A year-end review should include more than just comparing your assets against your debt.

• Review Savings
  You’ll be off to a good start if you review how much you have in savings, certificates and money markets. Could you cover at least 3 to 6 months or more of monthly obligations if you lost your income?
• Analyze Debt
  Look for ways to free up money to save for the future and to improve cash flow. For example, you may want to consider transferring high-interest debt to a personal loan, credit card or a home equity loan with a lower interest rate. If there are better terms and lower rates available, it also may make sense to refinance your mortgage, car or student loans.
• Consider Life Insurance Needs
  Do you have enough coverage? If you don’t currently have a life insurance policy, is there someone who depends on your income who would need financial help if something happened to you? If you’re not sure where to begin to get coverage, check out our affordable options.
• Check Retirement Accounts
  Because retirement accounts (e.g., 401(k), IRA, Thrift Savings Plan) provide a number of tax advantages, they can be a powerful saving and investing tool. If you haven’t contributed to a retirement account or haven’t contributed the maximum allowable, do it now.

Don’t have a retirement account yet? Our retirement interest calculator shows how much your retirement account could earn. Here’s a snapshot of 2 of the most popular types.

Traditional IRAs feature tax-deferred growth, which means you won’t pay taxes until you withdraw the money. That can be a great advantage because most people will be in a lower tax bracket after they retire, so they can expect to pay less tax. And, your contributions may be tax deductible.

Roth IRAs. With a Roth IRA, you make your contributions after you’ve paid taxes (from your net paycheck). You can’t deduct them on your tax return, but when you start making withdrawals, you won’t pay taxes because you’ve already paid them.

If you’re still uncertain which type would work best for you, a financial advisor can help.

• Find Extra Funds
  Do you have any extra money each month that you could put to work? Have you considered a side gig to bring in more income? Consider putting these extra funds in an account that will allow it to grow, like an investment account.
• Consider Investments
  Already have an investment account? Ask yourself these questions:

• Is my portfolio still aligned with my investment strategy?
• Has my risk tolerance changed?
• Do I need to adjust my asset allocation?
• Does my portfolio need rebalancing?

Haven’t begun investing?
It has the most potential to grow your funds over the long term. You don’t need a lot of money to get started. You can invest a little at a time. Not confident you know enough? There are investing apps and services available that can do the hard work for you, like Navy Federal’s Digital Investor.

• Create or Review Your Estate Plan
  Does your current plan need to be revised? It may help to talk it over with a financial advisor. It also would be a good time to have your will reviewed for needed updates.

Don’t have a will? Consult an attorney or check out online templates that may work for your circumstances.

Get Help With Your Year-End Financial Review

It can be complicated to do a comprehensive review of your finances. That’s why you may need to consult a professional. Here’s how Navy Federal Investment Services can help.