Stay on Top of Your Finances
The new year is an ideal time to take a fresh look at your financial situation. Here are a few steps to help you get your financial house in order:
Fine-tune your budget
Your household budget needs periodic updating. Track your spending for at least 30 days and compare the figures with your expectations. If some expenses are higher than you thought, consider whether you can cut back spending. Otherwise, adjust your budget to reflect your new reality.
Review your credit reports
Lenders use your credit reports to determine your eligibility for loans and the interest rate they charge. Check with each of the three major credit reporting agencies—Equifax, TransUnion and Experian—to make sure your information is correct. For example, are the loan balances listed by each agency accurate? Are there errors concerning recent late-payment resolutions? Make sure the report doesn’t list loans or credit accounts you don’t have. You can get a free copy from each agency once a year at annualcreditreport.com.
What You
Can Do Now
Get a jump on your monthly budgeting by tracking your household spending and plugging those figures into Schwab’s MoneyWise budget planner. Visit schwab.com/moneywise. Click on the Calculator and Tools header for the Monthly Budget Planner.
Update your beneficiary designations
Beneficiary listings on retirement plans, life insurance policies, annuities and other accounts override wills. So review your beneficiary designations once a year and keep them up to date—particularly if you’ve experienced a major life change such as a marriage or the birth of a child. Contact your insurance agent and broker to get a copy of your beneficiary forms, and visit schwab.com/beneficiary to elect or update your retirement account designations.
Rebalance your investments
A volatile year in the stock market can throw your mix of stocks, bonds and cash out of balance. Review your portfolio’s allocations at least once a year: If they’ve shifted from your targets, either move assets from overrepresented funds to underrepresented ones, or direct new contributions to the funds that fall short. You typically can do this on your company’s online benefits page or at schwab.com/rebalance.
Take a snapshot of your net worth
An accurate picture of your net worth can help you make financial decisions about everything from managing debt to saving for retirement. It’s as simple as adding up your assets and subtracting your liabilities (what you owe). Be sure to include tax liabilities in your estimate, and take into account appreciation of assets such as jewelry, and depreciation of assets such as cars. 