Start the year off right by focusing on a better financial future. Here are some steps you can take now.
by STWS Advisor Jennifer Meyer, CFP©
At the start of every year, we are focused on how we can improve on the last year. Here are steps you can take to make sure you are prepared financially for 2024 and beyond. Here are five of my favorites.
1. Create/Update your net worth statement.
I find many federal employees have a rough idea of their total net worth (assets-liabilities=net worth) but very few actually track it year to year. Creating a simple spreadsheet with the value of your assets on the top and liabilities on the bottom is a great way to bring into focus your overall financial state. Your goal is to start 2024 with more assets and fewer liabilities!
2. Check your new leave year LES when you receive it.
Make sure that your TSP deductions are correct for your 2024 contribution goals. Your health insurance premiums most likely changed so ensure that figure is what you expected it to be. Ensure your Flex Spending Deductions and Health Savings deductions are correct. Lastly, make sure the federal and state withholding is correct. One year- my husband’s company neglected to account for the higher taxes our county pays in his state withholding. We ended up owing a LOT in state taxes that year, because no one caught it until late in the year. Never again, I vowed!
3. Determine how much in interest you paid last year.
There is good interest and bad interest. I like to look at my overall interest expense annually. Companies will generally provide a year-end statement early in the new year. Buried in that statement is the annual interest paid year to date. Guess why that figure is buried? It is because the lender probably hopes you don’t realize how much you paid them in interest! Remember, interest is money from your wallet you are giving to the lender. If you were not paying that interest- that would be money you could be spending now or saving for the future. Annual goal- monitor your interest payments and try to only incur “good” interest expense.
4. Track your expenses
One of the biggest questions you will need to answer when you look towards retirement is “how much will I need in monthly income to live the life I want to live in retirement?” A financial planner can help you answer this question, but ultimately, you know your lifestyle and what you hope it will look like. It is never too early to start projecting these figures. There are many apps and budget planning programs available. I know some who use a simple excel spreadsheet. It may take a few attempts to get comfortable with a program or app. However, perseverance pays off; Don’t give up!
5. Check on your TSP!
For federal employees, it is absolutely critical to stay on top of your TSP. This does not mean check your account balances daily- but rather, make sure that you are maximizing your contributions and re-balancing your allocation at least annually. Many people are not aware that you can contribute to Roth TSP with no income restrictions. This is different from a Roth IRA. Also, if you are turning 50 anytime in 2024- you can start making catch-up contributions effective the first pay period of 2024.
These are few of many tips for setting yourself up for a brighter financial future. At Serving Those Who Serve- we are here to help federal employees make the best decisions for their unique situations. Remember, rules of thumb are great guidelines – but are not intended to be perfect for every individual situation. We can help you make the most of your federal career by understanding your benefits and helping you apply them to create your brightest financial picture for today and into the future. The time to start is now. Wishing you a great 2024!
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**Written by Jennifer Meyer, Financial Planner. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Jennifer Meyer and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.**
