On New Year’s Day, my husband and I sit down at the kitchen table and map out our financial plan for the year. We have three children, so whether it’s deciding on our travel plans or allocating money for retirement, we make decisions that divvy up how we will spend and invest our money over the next 12 months.
This annual planning session achieves two goals: It helps us balance our family planning activities while providing a quick review of our current investments. On one hand, it’s fun to consider a trip to Disney or a Caribbean cruise for our family vacation. On the other hand, we check on the progress of our cash and investment accounts to make certain we’ll have enough money to live comfortably now, as well as 20 years from now, while paying for three college educations in between.
If you want to get a jump on your 2019 finances, here are six tips on how to allocate your time and money to help ensure you are saving and investing in the right places:
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
No. 1: Pay off all Holiday Bills.
My husband and I enjoy giving gifts to family, friends and our community, especially this time of year, and it does add up. While we use cash for some gifts, we pay for others with credit cards to earn the rewards before paying off any debt in January. Our goal is to quickly pay off these credit cards and start 2019 free of any credit card or other consumer debt.
No. 2: Plan the Family Vacation Schedule.
This task accomplishes two things. First, it provides a timeline so we can set aside the money to pay for the vacations. For example, if we want to take a summer vacation once the school year is over, we have roughly six months to budget for that. Second, I can block out time on my work calendar. This has been the No. 1 reason our vacation plans have fallen apart in the past — and it doesn’t make me very popular at home!
No. 3: Set Aside Money to Fund our Individual Retirement Accounts.
In 2019, individuals can contribute $6,000 if they are under age 50 and $7,000 if over age 50. That’s a $500 increase from 2018. I like the discipline and challenge of saving the maximum each year, since you can’t go back and make up for missed years of IRA contributions. Remember you need to have earned income in order to contribute to an IRA.
No. 4: Fund 529 College Education Savings Plans for our Children.
In addition to giving families a way to save, many states provide a tax deduction for these contributions. We live in Georgia, which allows a married couple to deduct the first $4,000 they contribute for each child on their state income tax. Education is a priority for our family, and we know we need to sock away much more than $4,000 per child each year to reach our goals.
No. 5: Fund Our Health Savings Account.
We choose a high-deductible health insurance plan, which means we can contribute before-tax money to a health savings account to pay for doctor visits and other medical bills. The amount people can contribute to these accounts in 2019 is $3,500 for singles and $7,000 for families, with an extra $1,000 for those over age 55. Our goal is to not touch the money in our HSA each year, and let it build up for retirement or any unforeseen large family medical expense we might encounter down the road.
No. 6: Increase Our 401(k) Retirement Fund contributions.
I’m a big advocate of contributing the maximum amount to this account each year, which will be $19,000 in 2019 for those under age 50 and $25,000 for those ages 50 and over. Like IRAs, you can’t go back and make up for missed years of 401(k) savings, so make this a priority now.
Because we want to set aside money for all of these accounts, we budget monthly savings for the 401(k) and 529 plans, and periodic lump sum deposits into our IRAs and HSA during the year as we have extra cashflow. All the while making sure our vacations can be paid for without lingering credit card bills.
Don’t be intimidated by the planning process. It may take time to mix the fun part (planning the family vacation) with the hard part (saving all of that money now instead of spending it). But taking a few hours each January to knock out a plan will help pay dividends for many years to come.
-
The power and flexibility of 529 savings plansSPONSORED Today’s 529 plans can be used in more ways—and at more types of schools—making them one of the smartest ways to save for education.
-
Stocks Grind Up to New All-Time Highs: Stock Market TodayUnitedHealth stock led the Dow Jones Industrial Average amid increasing signs the labor market has not been well for months.
-
I'm a Financial Adviser: You've Built Your Wealth, Now Make Sure Your Family Keeps ItThe Great Wealth Transfer is well underway, yet too many families aren't ready. Here's how to bridge the generation gap that could threaten your legacy.
-
Want to Advance on the Job? Showing Some Courtesy and Appreciation Could HelpTwo business professors share their insights about the impact of digital communication on the social skills of some in Gen Z and the importance of good manners on the job.
-
From Job Loss to Free Agent: A Financial Professional's Transition Playbook (and Pep Talk)The American workforce is in transition, and if you're among those affected, take heart. You have the skills, experience and smarts that companies need.
-
A Financial Planner's Top Five Items to Prioritize When Your Spouse Is IllDuring tough times, it's easy to overlook important financial details, but you'll be so much better off if you take care of these things right now.
-
An Expert Guide to Outsmarting Inflation: Don't Let It Restrict Your RetirementInflation is often underestimated when estimating retirement income, education funding or investment returns. These strategies can help preserve your purchasing power and reduce your financial anxiety.
-
Your 401(k) Options Just Got More Complicated: Here's What You Need to KnowPrivate equity, real estate and expanded annuities are now options, but they are more complex, less flexible and more expensive to own.
-
One Big Beautiful Bill, One Big Question: Will We Keep Giving?The rules on charitable giving are changing. For some, tax deductions for donations are now an option. For others, that option may have been curtailed.
-
I'm a Financial Planner: Here Are Five Phases of Retirement Planning You Have to Get RightA solid retirement plan is a must, but you can't go halfway. Neglecting just one area of your plan could cause the whole thing to collapse.
