10 Money Moves to Start the New Year Right – AARP

3. Reassess your budget.

Another golden rule of financial security: Make sure your monthly spending is less than your monthly income. Your needs may be far different than they were before the pandemic. So take an hour or two to review your outlays: Make a list of all your regular bills, such as your mortgage or rent, insurance, cellphone and utilities. Look at a few recent months of credit card and bank statements to see what youre spending on food, health care and the other expenses in life that are hard to keep track of. Its easy for things we dont value to get added to our budget over time without us realizing it, says Laura Cuber, a financial adviser in Schaumburg, Illinois. Look for places to cut: small items that add up, recurring charges for services you no longer need, or big changes that could have a major impact, such as moving to a less expensive area.

Just in case we face yet another year of natural disasters, inventory your possessions and review your homeowners or renters insurance. Use your smartphone to take a video of everything in your home, says Eileen Freiburger, a financial planner in Sebastopol, California. Narrate while taping to give context and to highlight things of value. Open your drawers and closets: Make sure its all there so later you arent trying to guess, she says. Save the file online in case you have to make a claim. Separately, verify that you have enough coverage to rebuild your home if its destroyed a problem after the California wildfires, says Kathryn Peyton, a financial adviser in Sonoma County, California. For a good estimate, she recommends asking a builder about local construction costs per square foot for your type of home.

You may have accumulated a variety of retirement accounts from former employers through the years. Track down those accounts and weigh the benefits of consolidating them into one account an IRA or, if youre still working, possibly your current 401(k). That makes it easier to track required minimum distributions; you might also save money by switching out of high-fee investments in one account into low-fee funds in another. Im a really big proponent of trying to consolidate, says Michelle Morris, a financial planner with Brio Financial Planning in Quincy, Massachusetts. Either you do it while youre still alive, or your heirs will have to find everything.

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10 Money Moves to Start the New Year Right - AARP