The opinions expressed in entries in the LC Blog are those of the author, not of Lawyers Club of San Diego.
The Money Confidante
It’s April - a great time to spend a little time taking care of you and your financial health. This is the perfect time to make sure you are on track with investing for the year. Here are some guideposts to help you chart your course for the year:
1. Do a quick audit of your savings accounts. Do you have enough cash in savings to cover six months of your fixed expenses? If you are a K-1 employee (that’s most of our attorney clients, and many of our business owners), do you have a savings account dedicated to your estimated taxes? Is savings on track for January estimated taxes? Is your savings account paying you anything? You might want to open a high interest bearing savings account to park your money.
2. Check in on your retirement contributions. You’ll want to log in to your employer retirement account and check your contribution level. For most of you, this will be your 401(k) or 403(b) account. For others this will be your TSP and Keogh. Your goal is to contribute the maximum to this account, or at the very least enough to get the full match your employer provides, if they have a company match.
3. Check the investment allocation in your retirement accounts. This is the amount of stocks and bonds in your account. When in doubt, consider a target-date fund, but ideally you’ll choose a mix of stocks that provides for growth over time—especially as we women have the gift of longevity. Importantly, ensure you are comfortable with your stocks if the market gyrates, and that you include a mix of bonds to help you weather any short-term market storm.
4. Check your paystub for withholding. Did you owe more than you expected in taxes last year? Did you get a bigger refund than expected? Your withholding may be off, if you are a W-2 employee. This is a good time to reach out to your CPA with that paystub so they can help you adjust it now, at the beginning of the year, so you are on track.
5. Do a quick review of your income and expenses. Do you have extra cash you can put to work? With travel plans still on hold for most and other expenses like dining out reduced, you might find extra money that can be put to work. If you aren’t maxing out your 401(k) plan and have extra cash, now might be the time to increase the contribution amount. If you still have extra cash, consider contributing to a non-retirement account, or an IRA. The type of account will depend on your intentions, but you’ll want to ensure the money is working for you.
This is a great time to take a few minutes to make sure your hard-earned money is working best for you.
Bridget Grimes is a financial planner who helps female attorneys live the life they want by having a plan for the four financial derailers.