LITTLE ROCK, Ark. (KTHV) -- The coming of a New Year often prompts people to think about pursuing their goals. Now is an excellent time to focus on what you need to do to get your financial house in order.
Eric Hutchinson President of Hutchinson Financial says every person's goals are unique, but here are four important considerations:
1. Lay the Right Foundation
One very important foundation everyone should try to achieve and maintain is to establish adequate cash reserves to handle life's little emergencies. Most financial professionals recommend keeping three to six months worth of living expenses in readily available cash reserves such as savings accounts, short-term certificates of deposit, and money market funds.
2. Build Retirement Assets
Calculate how much you need to save for your retirement years. If you are coming up short, funding an IRA may help you close the gap. For the 2012 tax year, you may contribute a maximum of $5,000 to a traditional or Roth IRA - plus a $1,000 catch-up contribution if you are age 50 or older. If you haven't yet made your 2012 contribution, you may do so up until April 15. Another valuable tool is increasing your contribution to your 401(k) or other employer-sponsored retirement plan. Contributions to these plans can go as high as $23,000 per person year in 2013.
3. Prepare for Education
College costs continue to increase faster than the rate of inflation, which presents a challenge for academically minded families. In addition to saving as much as you can afford and pursuing financial aid, you may want to consider a 529 plan. 529 plans offer higher contribution limits and have more flexibility than other types of education savings accounts and offer unique tax benefits.
4. Evaluate Your Estate
When crafting your financial plan, take a moment to consider whether your investments complement the provisions of your estate plan. If you don't already have an estate plan, getting a will or trust could be one of the most important things you do for your family this year. If you do have an estate plan, maybe it's time you had it reviewed to make sure it still reflects your wishes for the handling of your estate. Also, don't forget to review beneficiary designations to make sure they are up-to-date.
By capitalizing on the goal-setting opportunities of your New Year's resolutions, you'll improve your chances of making the coming year a building year for your financial future.