Q: I’m a young professional and everyone tells me it’s never too early to take control of my finances and start thinking long-term. Now that another year has begun, what should be I be doing to financially prepare for 2015?
A: There are a number of things you can do to start the year on a positive note. Here are just a few things to get your house in order:
— Identify your goals and then set a budget. It is critically important to set goals for yourself. Otherwise, what are you working for?
Be open and honest with yourself regarding what you want to achieve. And make sure that your goals are SMART — as in specific, measurable, attainable, realistic and timely.
It might be boring and time-consuming, but creating a budget is key. Take a moment to sit down and draft one. It does not need to be perfect, but having an understanding as to where your money comes and goes each month can help you identify saving opportunities and stay on course to achieving your financial goals.
— Start a retirement plan or adjust your current one. Check with your employer regarding any changes to your retirement plan or make changes to your current plan.
Saving for retirement as soon as possible in your working life is not only essential for long-term security, but pretax 401(k) contributions could help you lower your taxable income. This year, you can contribute up to $18,000 to your 401(k).
— Change your benefit elections. Consider contributing money into a Flexible Savings Account, or FSA, if offered. The contribution limit is $2,550 for 2015. You would be surprised which everyday items are FSA-eligible. Visit FSAStore.com to see just how many.
Even if you rarely visit the doctor and struggle to meet your deductible, this could be a great way to realize some tax savings this year.
— Meet with a financial professional. The beginning of the year is a great time to meet with a certified financial planner. While there are many reputable professionals out there, a certified financial planner is best equipped to help you put together a comprehensive plan to ensure that you are on track to achieving your goals.
Many of these certified professionals offer free consultations, so there is no reason not to have a discussion with one right away. To learn more, visit letsmakeaplan.org.
Boneparth is chief operating officer of New York-based financial services firm Life and Wealth Planning. Follow him on Twitter: @dougboneparth.
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