If we’ve all learned one thing during this past year, it’s that none of us live in a bubble, separate from the rest of the world! Whether you work remotely or within a bustling office setting, events that affect the rest of society always trickle down to affect you on an individual level. Having said that, it’s no wonder many of us have experienced financial setbacks in the past year or two. But with appropriate guidance, you can and will bounce back.
Trim your budget. After a financial emergency, it’s time to trim the fat from your budget. Review your monthly expenses carefully, so that you can hang onto more of your earnings as you recover from a setback.
Make a plan. Your financial life is all about numbers, and you need to work with absolute facts rather than trying to wing it. When you don’t have a financial plan, it’s too easy to become derailed. Make a detailed plan for your recovery, such as paying down debt or replenishing your retirement plan, and stick to it with precision.
Increase your earnings. Attack your budget from both ends. Reducing expenditures is one thing; now investigate ways to add to your income. Look into second jobs, ask for a raise, look for better employment opportunities elsewhere, or simply begin to sell valuable but unused possessions.
Take advantage of windfalls. If you receive a bonus, large tax refund, or unexpected inheritance, resist the temptation to splurge on a luxury item. Re-invest that money into your savings, pay off debt, or consider a job training program that helps you to increase your earnings.
Make catch-up contributions to your 401k or IRA. If you were forced to borrow money from your retirement account, remember that those aged 50 and over can make catch-up contributions while enjoying the same tax advantages as regular contributions. You can stash an additional $6,500 in your 401k and $1,000 in your IRA each year.
Investigate health savings accounts. Health savings accounts are available to those enrolled in low-premium, high-deductible healthcare plans. The intent is to assist you in managing out-of-pocket healthcare expenses in a tax-advantaged way, but savings in these accounts can also be rolled over each year and even into retirement. Therefore, a health savings account can actually serve as a loophole to retirement planning, allowing you to plan for future healthcare expenses.
Consult with us. If you’ve experienced a financial setback, remember that the experts are available to help. Call us to schedule an appointment and we will help you craft a plan for recovery.