(Photo credit: Tax Credits)
When it comes to money goals in 2014, there are a few financial tasks that should be on your priority list – from avoiding useless fees to maximizing your investments.
Here are a few financial priorities for 2014:
1. Be mindful of bank fees
Some of the most common bank fees include overdraft fees, which happens when there’s not enough money in your account to complete a transaction, or ATM fees, where you’re withdrawing money from an ATM that’s not within your network. Many times banks will charge you monthly fees upwards of $10 per month if you don’t maintain at least $1,000 in the account. The days of free checking are coming to an end. We’re in a new era of increased financial regulation, so banks are looking for ways to make up for lost revenue. Over time, these fees add up. Consider switching to a credit union or an online bank, which tend to have much lower fees than your traditional banking institutions.
2. Pay attention to your retirement savings
You may have a 401(k) from your employer – if you do, contribute up to the point at which your employer matches – this is free money. But you also need a Roth IRA – this is not from an employer, but instead from a discount brokerage firm. You can deposit up to $5,500 per year into the account and withdraw the original investment without any penalties or fees. With a Roth IRA, contribute to various index funds and even exchange traded funds, which have very low fees, compared to mutual funds. What you can do is called dollar cost averaging, where you contribute a fixed amount of money every month. Then over time, when the markets go up, you’ll make money, but even when they go down, you’re money will allow you to buy more and have more skin in the game, so it’s classic investment strategy
3. Start thinking about college savings
College costs are unaffordable – tuition is on the rise, well beyond the rate of inflation. So the sooner you can save, the better. But keep in mind, if you have to choose between saving for retirement or college, keep retirement as your focus. You can finance college with loans, but you can’t finance your retirement with loans. You’ll be ahead of the curve, however, if you open up what’s known as a 529 plan, which has tons of tax benefits, most notably the ability to have your money grow tax deferred and that the distributions that come out of the plan to pay for your kid’s college are also exempt from being taxed. There are also plenty of state tax breaks. And you can open a 529 plan from a financial advisor or a discount brokerage firm. They key is to start saving as soon as possible.
4. Get ready for tax season
Tax day is just about three months away, so you want to be on the lookout for various tax forms that your employer will be sending in the coming weeks, such as W2s, 1099s, statements from 401(k)s, as well as interest paid on student loans and bank accounts – so keep all of these documents in a safe place. Plus, don’t forget the little things like making an appointment with an accountant or tax preparer, who not surprisingly are very busy in the weeks leading up to tax day.
Scott Gamm is author of MORE MONEY, PLEASE. Follow him on Twitter @ScottGamm.
