Originally published on Jan 3, 2019 on MarketWatch.com
by Catey Hill
Get more from your money.
Financial uncertainty is in the air — with some experts predicting a coming recession, more stock market volatility and more consumers defaulting on their debts, among other issues.
And while we don’t know what will happen, that uncertainty makes 2019 a good time to shore up your savings, spend less so you can save more, pay down debt and invest smartly. So we asked experts what money moves they’d recommend taking in 2019. Here are 15 of them.
1. Develop an investment policy statement, which is a document that outlines your investment goals and objectives and the strategies that you’ll use to make them happen, says Mitchell C. Hockenbury, a certified financial planner at Kansas City-based 1440 Financial Partners. It might include information on your asset allocation, risk tolerance and more. He recommends taking Vanguard’s Investor Questionnaire to help you develop the statement, or working with a professional on it.
A statement like this can be very helpful in financially uncertain times, says Hockenbury: “The purpose is to help you when you become anxious with big drops in the market. The last thing you want to do is to make poor investment decisions because of fear or greed.”
2. Rebalance your retirement accounts, says Darren L. Zagarola, a certified financial planner at EKS Associates in Princeton, making sure your asset allocation is in line with the goals from your investment policy statement. It can help to consolidate your 401(k) plans from old companies, which “allows you to get a better handle on your investment strategy and risk level,” says Andrew Westlin at Betterment.
3. Make sure you have 3-6 months of income saved in an emergency fund, says Leanna Johannes, a senior wealth strategist at PNC Wealth Management in Philadelphia. This is a savvy move particularly during uncertain financial times, as it can help protect you in the event of a job loss or other emergency.
4. Pay off your debt like this. Consumer debt hit record highs in 2018 – so make this the year you tackle yours. “The first step of your plan is figuring out the total debt you have, the type of debt and the interest rates on those debts,” says Johannes. “Then look for ways to consolidate your debt or lower your interest rates,” she adds — noting that you should negotiate lower rates if you can.
To tackle debt, consider aggressively paying off the highest interest debt and then the minimum on all others; once that is done, then tackle the next highest interest rate debt; and on and on until you’re debt free. And if you struggle with credit card debt, Priya Malani, the founding partner at Stash Wealth in New York, recommends Tally, an app that consolidates credit card debt from multiple cards into one lower monthly payment.
5. Move your savings online, says Malani. Most savings accounts are paying out very low rates right now so you want to earn as much money as you can. That’s why she likes online banks like Ally and Marcus. “They pay a higher rate of interest on their regular savings account than a typical brick-and-mortar bank,” she says.
6. Freeze your credit – even if you don’t suspect any foul play. This can protect you from people taking out credit cards and loans in your name in the future – and as data breaches and identity theft are becoming more and more frequent, this may be smarter than ever. “All three major credit agencies, Equifax, Experian and Transunion, allow you to freeze your credit file for free. Best of all, it only takes a few minutes to ‘thaw’ when you need to have your report pulled. This is the best way to be proactive in protecting your credit,” says Hockenbury.
7. Change your passwords for important logins like your bank, says Zagarola. This can help protect your accounts from getting hacked. Here’s a guide on creating smart passwords.
8. Make a concrete budget. You’ve heard this advice before but that doesn’t make it any less relevant this year. Indeed, experts say this is the best way to get your spending under control, pay down debt and save more. This guide will help you make a budget in seven steps, or consider budgeting software like YNAB to help. “One of the things that trips many people up is the semi-annual and annual payments, Hockenbury says — which might include things like car insurance payments or annual memberships. Take the extra time to think through these types of expenditures,” Hockenbury says.
9. Save with purpose, says Malani. Rather than have one big savings account for everything, you should have different accounts for different goals: “In 2019, put purpose behind your savings. Start by deciding what you’re saving for (i.e. trip to Portugal, new West Elm couch, etc.). Then set up a separate savings account for each thing or experience you’re saving for. Finally, nickname the savings account in accordance with its designated purpose. You’ll be much less likely to ‘borrow’ money from your Portugal vacay account than just a general savings account,” she explains.
And make that savings automatic so you actually end up saving the money, she adds. Set up automatic transfers from your checking to your savings account at regular intervals. To boost savings even more, Malani recommends the app Digit: “it will ‘sneak’ money out of it and save it for you. Promise you won’t miss it and before you know it, you’ll have a few hundred dollars saved up,” she explains.
10. Boost retirement contributions — even if it’s just by 1%. “At the very least, contribute enough to secure your employer’s match, which is typically between 3% and 6%,” says Johannes. Try to boost contributions every six months or so if you can.
11. Get smarter about your credit score. Malani says you should check out your credit score using Creditwise from CapitalOne (you don’t have to be a CapitalOne customer to use it). It shows you your credit score, why your score is where it is, and simulates how decisions like applying for a new loan might impact your score. It also has fraud alerts to let you know if someone is trying to use your personal information. If your score is low, here’s a guide to boost it.
12. Revisit your estate plan, says Zagarola. “Review your wills to ensure that your wishes will be met at your death. Review the beneficiary designations of retirement accounts and life insurance to ensure they marry up with your estate planning wishes,” he explains.
13. Reward yourself. If you always pay off your credit card in full and on time, you should be earning credit card rewards. Use this tool from NerdWallet to get the best rewards card for your lifestyle. Love the idea of rewards but want to play it a little safer? Malani recommends the app Debitize. Use your credit card as you usually would to get rewards, but link it and your checking account to Debitize. Buy something on your credit card, and Debitize will pull the money out of your checking account each day and at the end of the month will pay your credit card bill in full.
14. Shop around for new insurance. This can literally save you thousands this year. On car insurance alone, a good driver could save more than $400 a year by switching companies.
15. Fight overdraft fees. Overdraft fees have been steadily rising, with Americans paying more now than they have since 2009. Here are some tips for fighting those fees. You can also try the free app Earnin, which allows you to borrow up to $100 from your pending paycheck rather than have to wait every two weeks and risk overdraft. The app allows you to pay what you think is fair for the service. Just beware of the potential pitfalls, including blowing your budget and overspending.
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