There's more to adjusting to a new year than remembering to write the correct date on your checks. This quick to-do list can help you be better prepared for whatever the rest of the year may bring.
1. Know what's coming in and going out.
Take a close look at how much you're spending and what you're spending it on. This simple exercise can help you spend consciously, reducing unnecessary expenses that could be redirected into investments or paying down debt. It can also help you gauge an appropriate emergency fund.
Consider a budgeting app to automatically track and categorize spending, so you don't forget to add up small, on-the-go purchases.
2. Check the health of your emergency fund.
Aim to have enough to cover three to six months of necessary expenses – whether that's three months or six depends on your comfort zone. Try our Emergency Fund Calculator to help you quickly assess what that amount may be for you. Keep it in a savings or money market account so you can access it should an emergency arise.
Can an emergency fund be too big? Absolutely. Savings and money market accounts are easy to access, but they don't earn much. Consider taking excess reserves and investing it in something more likely to provide better returns.
3. Confirm your beneficiaries are up to date.
Especially if you've had a child, changed marital status or it's been a while since you set up your accounts. Review all your investment and insurance accounts as well as your employee benefits such as a 401(k) or insurance policy. Some providers may let you see or update your beneficiaries online, while others may need a quick phone call.
Remember, if there's a beneficiary named on an account, that overrides whatever you put in your will.
4. Look at the makeup of your investment portfolio.
Don't fixate on the news or today's performance figures – that can be anxiety inducing, especially if the market is bouncing around. Instead, focus on what you can control. Make sure the portfolio allocations that you’ve established with your Financial Advisor remain aligned with your goals, time horizons and tolerance for risk, and continue to invest on a regular schedule.
Keep long-term goals in mind and don't be spooked by down days. If you're stressed, talk with your Financial Advisor to confirm you’re still on track.
5. Increase your retirement contributions.
If your employer offers a retirement plan, consider boosting your pre-tax contributions by 1%, and you probably won't even feel it. Better yet – max out your contributions (especially if you have an employer match). If you feel like you should have set aside more last year, you still can. You have until April 15 to contribute to an Individual Retirement Account (IRA) and have it count toward the 2018 tax year.
Like any other elements of your portfolio, make sure your retirement accounts are aligned with your unique long-term goals and timelines.
6. Take your RMDs.
Beginning when you turn 70½, you need to take required minimum distributions (RMDs) from your tax-deferred retirement accounts (like traditional IRAs and employer-sponsored retirement plans) by December 31 each year to avoid a penalty.
For your first distribution (and only your first), you have until April 1 of the following year to take your first RMD and until next December 31 to take the second distribution.
Let PNC be your guide for your banking, investing and retirement needs. If you're not sure what steps to take or you have questions about how market shifts might affect you, give us a call at 855-PNC-INVEST or stop by a nearby branch. We're here to help.