In January we wrote about tax-advantaged ways to save money. This month we are sharing other ways to save. In particular, implementing financial actions that can have an even greater impact on a secure financial future. Great companies are known for their execution around process. Strong household balance sheets enjoy the same attention to detail. See how!
Automate savings, pay yourself first
We learn this early in our careers by having direct withdrawals come out of our paychecks to fund our 401k. It works for other savings opportunities too, like saving for a wedding or a new home. You can have funds go automatically into your savings or investment account once your income hits your checking account by taking advantage of online banking.
Pay down debt
Debt is a helpful tool when used properly. We are often asked whether it is a good idea to pay debt off early. Most of the time our answer is a resounding YES (student loans eligible for forgiveness might be an exception). We are happy to help you figure out debt repayment plans.
Aggregate investment accounts
It is not unusual for people to have multiple investment accounts spread across multiple advisors and employers. We call this a “hit-or-miss” asset allocation. By aggregating accounts not only can you save on fees, you can fine-tune your asset allocation so that it is in line with your long-term strategic goals.
Annual tax planning
We recommend annual tax planning. Things change from year to year, so it is a good idea to plan for it every year. Having a tax strategy can cumulatively save thousands, or even tens of thousands, of dollars over a lifetime. At Mosaic Fi, we provide tax planning ideas for all of our clients and will work with your tax advisor at your discretion.
For retirees, in particular, it is an ongoing process of projecting a client’s yearly taxable income to determine whether changes can be made that will have the effect of minimizing taxes for the upcoming year and throughout the distribution phase of their plan. In other words, we help you plan for optimal after-tax income.
Once you have thought through and implemented an optimal saving and tax planning strategy, you can rest easier knowing your money is not only working for you, but that you are taking advantage of the opportunities to save, invest, and reduce your tax bill which will, in turn, move you one step closer to reaching your financial goals.
A final note about saving-brainstorming ways to save is a fun thing to do with the kids, no matter their age. You might be surprised by their ideas!
Jenifer Aronson is the Founder of Mosaic Fi.