As 2020 draws to an end, it is time to close the year and give ourselves a fresh start. When a new year begins we make New Year’s resolutions that we plan to achieve during the year, but often by the end of January we have reverted back to our old ways. Resolutions long forgotten. But not this year! This year you will act on the resolutions you have made in the first few weeks so they happen. In 2021 you won’t get to the end of the year and wish you had completed them.
If we would get in the habit of utilizing our time the way high performers use their time by doing things promptly instead of putting them on a list to do later, we would get much more accomplished. So, this year commit to some things you can do in the first couple of weeks that will make this year the year you achieve your resolutions. If you have a problem with following through with the goals you set, read this link about the secret sauce of goal achievement. Following is my list of ten things to help you start the New Year out with a bang. Let’s see how many of them you can do by February 1st.
1: Increase your monthly 401(k) deposits, or whatever other retirement plan you have at work. This will automate your savings while giving you a tax break. When the money is automatically withdrawn from your paycheck, you will likely not miss it and the nest egg it creates over the years will be substantial. If you are self-employed and don’t yet have a retirement plan, don’t let January end without setting one up.
2: Fund an IRA account for you and your spouse. This year you can each deposit $6,000 into your IRA accounts. Fund it this first week of January and be done for the year. Depending on your income level, this can best be accomplished with a traditional IRA (tax break now with tax deferred growth), Roth IRA (No tax break now but growth is never taxed), or a back-door Roth IRA for those who don’t qualify for a Roth IRA (No tax break now but growth is never taxed).
3: Make payroll tax withholding adjustments. If you will get a big tax refund or have a large amount of taxes to pay, then adjust your payroll deductions so the amount of taxes withheld will be closer to the actual amount owed. Your best bet is to pay the same amount with every paycheck and end up owing nothing additional at the end of the year. If you have a variable income, or a rapidly rising income, then set up your payroll deductions for taxes to comply with safe harbor rules so you will at least not owe any penalties for underpaying. If your adjusted gross income is less than $150,000 then pay the same amount as you owed last year. If your adjusted gross income is greater than $150,000, then pay 110% of last year’s taxes.
4: Refinance your loans. If interest rates are down a point or two since you got a particular loan, then refinance the loan and save on interest. You will only need to do this paperwork once and you will reap the benefits from the savings for the life of the loan.
5: Buy and read a book on finances. There is no time like the present to read a good book that will improve your life. If you don’t know where to start, read one of mine. Most likely you already have one on your shelf that you bought but haven’t yet read. Start reading it tonight.
6: Fund your HSA. If you have a high deductible medical insurance plan, you likely qualify to have a Health Savings Account (HSA). The maximum contribution in 2021 is $3,600 for an individual and $7,200 for a family. This is a super good retirement account. You get a tax write off now when money is put into the account, it grows tax free, and when you spend it later, on healthcare, there is no tax owed. So, contribute to the fund this year, but don’t spend any of it until you have retired.
7: Start or fund a 529 college savings plan for each of your kids. Many parents want to help their kids pay for college. If you are debt free, make good money, live within your means, and save a lot, paying for college will not be a problem. If you do not fall into that profile, then a college savings plan might be for you. There is no immediate tax write off, but the account grows and gets spent tax free if the funds are used for education.
8: Increase your giving. Why not bump it up this year? Last year was tough for many organizations so they could use an extra boost at the beginning of the year. If your goal is to tithe to your church (give 10% of your income) now is a great time to start. If you can’t afford to give a full tithe right now, then start with less, maybe 2%, and work your way up. So many people say they want to give more, but they don’t. Now is the time to make a change.
9: Make or update your will. This is another task we tend to put off. We naturally think death is a long way off. But many die unprepared. If you don’t have a will, get it done before the end of January. If you have a will and it hasn’t been updated in over 5 years, re-read it and see if alterations are needed. If you have had another child since you wrote the will, they may need to be added.
10: Get a coach to help you change your life. Back in 2006, when I wanted to make some changes in my life, I realized that the only time I have made major life changes was when I had a coach. There were many times in the past when a coach helped me advance. Depending on the kind of changes you wish to make, find a coach that specializes in your goal. Fitness trainers, financial advisors, motivational consultants are just a few areas that have coaches available. If you don’t know where to start, I have opened up my schedule this winter to accommodate 12 students in my one-on-one High Performance Coaching program. If you would like to be considered for one of the slots, get ahold of me at MD@FinancialSuccessMD.com and we can get started. If you need more information, check out my article on My Biggest Breakthrough of the Year and see what High Performance Coaching can do for you. If you need financial coaching, then my one-on-one financial makeover is right for you.
Now you have ten ways to change your life. Even if you only do one of them, you will make a positive impact on your future. Each additional item on the list you execute will create even better results. Go out and make 2021 your best year ever. Please contact me if there is any way that I can be of further assistance to you.
Happy New Year!