Yahoo Finance Top 5 Financial Goals You Should Consider for 2015
Every new year, we are faced with the same question. What goals am I going to commit to for 2015? Unfortunately, many people will answer this question with a long list of elaborate goals and resolutions. The problem is these same people will get to the end of the year without hitting more than about 10 percent of the goals they listed.
So, to change last year's failures into this year's successes, let me give you some suggestions for building not only the best 2015 goals, but accomplishments.
Let's first talk about the most meaningful goals of the year. And when I say meaningful, I am talking about those that could most affect your financial situation. Keep in mind that you should not try to commit to too many things, but only those that are worthwhile for you, and those that you have the potential to achieve.
1. Set up a full financial plan. As a certified financial planner, I believe everyone should have a financial plan, and that they should review this plan each and every year. But it is interesting how few people actually have completed this type of planning. Every day, I meet with people either in or near retirement and almost all of them have never completed a plan.
The reason the plan is so important is that, if done correctly, you can not only get a good idea about where you currently sit financially, but more importantly, you can find out if you will be able to retire or stay retired. Think about it when you put all of your current assets, liabilities, pensions, investments, taxes, inflation and rates of return into a financial planning software and then set some retirement goals (both age and monetary needs). Then you will get a better idea of what it will take to get there.
You will not only find out if you are investing enough each month, but also what kind of return you will need to hit your goal. I often see people investing very aggressively, as if they are trying to get a 10 to 12 percent rate of return, but after completing their financial plan, we find out they really only need a 6 percent return. It just does not make sense for them to be so aggressive, especially if they are already retired or very close to retirement.
2. Max out on your annual investments. Many people are not maxing out their annual contributions to retirement plans, savings accounts or even 529 plans for their kids' college funds. It is a new year, and now is the time to figure out what the limit is for each plan, how much you can afford and ensure you are putting that amount away each month automatically. And by automatic, I mean that it comes out of your paycheck before you even see it.
3. Be prepared for paying your taxes through early planning. At the end of 2014, I wrote a blog entitled, "9 Last-Minute Tax Strategies for 2014." Now that we are in 2015, it is time to ensure you are doing the proper planning, so you will not be rushed at year-end to complete those same tax saving tasks.
In that blog, I named a few very important things, such as maxing out your retirement plans, which I mentioned above, but if you are age 50 or older, you can also add an additional $5,500 to your 401(k) and $1,000 to your individual retirement account or Roth IRA. Also, make sure you are taking out your required minimum distribution (maybe by taking it out monthly). And do a mock-tax return for the year, so you can get an idea of where you will be tax-wise and won't be hit with a big bill by April, or the time for tax-filing.
4. Get your finances organized. It is important to keep your investment and tax documents, but sometimes having so much paper can get a little overwhelming. The best way to handle this is to have a system on how to handle paperwork. First, hang on to any statement that you cannot reproduce (meaning you don't have online access). Also, if you have the ability, find a secure online storage system, and drop those documents into that program. I personally hang on to all of my old tax returns (I have scanned most of them and store them online) but I only print my end-of-the-year investment statements. This definitely cuts down on clutter and saves a few trees to boot.
5. Finally, if you have debts of any kind, establish a plan to pay them off. If it is credit card debt, then take the smallest card and pay it off first, and then the next and the next. If you only have a mortgage, see if you can pay one or two more payments per year. This simple process could literally take years off of your mortgage. Why not make 2015 a debt-free retirement year?
There are so many things you can do to make 2015 a great year. But remember, the only resolutions that are effective are the ones that get done.
Good luck and Happy New Year.
Kelly Campbell, certified financial planner and accredited investment fiduciary, is the founder of Campbell Wealth Management and a registered investment advisor in Alexandria, Va. Campbell is also the author of "Fire Your Broker," a controversial look at the broker industry written as an empathetic response to the trials and tribulations that many investors have faced as the stock market cratered and their advisors abandoned their responsibilities to help them weather the storm.
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