Principal • Meridian Investment Advisors
What should I be thinking about when it comes to my financial health headed into a new year?
Having a firm grasp on annual expenses versus income is one of the first steps to becoming financially secure. The end of the year is a great time to review expenses you’ve incurred throughout the year and make the adjustments needed for the year ahead. For those who are married or in a relationship with someone who has a common financial interest, it’s a great time to start having conversations with your partner so common goals can be set and accountability can be established.
What is something young people tend to overlook when it comes to financial planning?
Enroll in your employer’s retirement plan, especially if there’s a company match. It’s tempting to think, “I can start that later because I need to handle all these other expenses now.” One of the most important pieces of financial well-being is a well-funded retirement. If you start contributing to a plan in your 20s, you can reach that goal with a modest contribution during your working years. Money saved in your 20s will be worth four to five times that at age 65. You can’t make that up by contributing more later.
I have heard of a 529 Plan, but I am not sure if it is worth setting one up. What are the advantages?
529 plans offer three main benefits: Contributions to certain plan providers such as Arkansas Brighter Future 529 are state-tax deductible; contributions can be invested in a variety of investment vehicles for which earnings grow tax deferred; and withdrawals can be taken tax free for qualifying education expenses. Another important feature is that account owners, typically parents or grandparents, retain control of the funds even after the beneficiary, typically a child or grandchild, reaches adulthood. This allows the account owner to decide how and when the funds are used. Many people worry that the young child they are saving money for won’t end up going to college, but the great thing about 529 plans is that the account owner can change beneficiaries to another family member without penalty.
How do I know what sources to trust for financial advice?
As with all financial topics, seek the advice and opinions of people you trust and people who put your best interest ahead of their own. Work with people who are experts in their domain and who can introduce you to the appropriate person when they’re not best suited to provide expert guidance on a particular topic. Lastly, understand the compensation incentives of the people working on your behalf, and ensure it’s properly aligned with your goals.
Investing for a rich life — Realizing what you value.
501.663.7055 • meridiania.com
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