Use November to organize your finances

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The weather is cooler, the days are shorter, and November is a great month to organize your finances!

This article contains eight steps that you can follow. I encourage you to take the first two steps which are a statement of assets and an emergency fund. All other steps are optional. Read them through and choose the ones you like! The reward is that Thanksgiving is coming up and you can be grateful that you are in control of your finances.

  • Draw up a statement of assets. This is a simple but essential step. Just write down a list of your assets, including the estimated value of your home, the latest balance for each of your investment accounts, the current balance on all of your bank accounts (check, savings, CDs, etc), and any other assets you own. Then make a list of your liabilities that are your debts. This often includes the balance of a mortgage, possibly a car loan, student loans, and credit cards that are not paid off in full each month. If you need a template for your statement of assets, you can find it at www.donnaskeelscygan.com/insights/tools/. However, a sheet of paper and a pencil work just as well.

When you have completed your balance sheet, keep it in a safe place. Plan to revise it in November 2022 and you will likely see higher net worth. Focusing on our finances tends to help them grow!

  • Create an emergency fund. If you don’t have a “rainy day fund”, open a savings or money market account and start saving. The goal is to save enough to cover between four and six months of your expenses. Do not mix your emergency fund with other money. Keep it separate.

• Do a credit report with all three credit bureaus. These reports are free, and you can also request your credit history for free. Check the credit reports. If you find that the report lists old credit cards that you haven’t used in many years, call the credit card company and cancel the cards. If you have inaccurate information on your credit report, correct it. You can find the contact details of all three credit agencies in the box opposite.

• Assault credit card balances with all your might. If you have credit cards that don’t have their balances paid out in full every month, put them on a table and write down the current balance on each one. Decide which credit card to withdraw first and commit to paying extra on that card until the balance is zero. Do this for each card. While you are cashing them out, do not use the cards to purchase new items.

• Contribute to your employer’s pension plan if the employer offers compensation. Often times, an employer will offer a 3 percent discount if you contribute at least 3 percent of your salary. If you make $ 50,000, you’ll need to deposit at least $ 1,500 (that’s 3 percent) and your employer will pay another $ 1,500. This is literally free money that you won’t want to miss out on! If your employer’s plan offers a Roth option (from a 401 (k) or 403 (b)), choose the Roth option. Of course, you can deposit more than the amount required to receive your employer’s match. For 2021, you can donate up to US $ 19,500 if you are under 50 or US $ 26,000 if you are 50 or older. The highest possible contribution is particularly valuable if the Roth option is available in your employer’s tariff.

• Funding a Roth IRA. If you don’t have a Roth IRA – and your gross adjusted income is less than $ 125,000 if you’re single or $ 198,000 if you’re married – you can fund a Roth IRA with up to $ 6,000 per year if you’re under the age of 50 are old and up to $ 7,000 if you are 50 years of age or older. You can fund the Roth IRA for the 2021 tax year until April 15, 2022, but why wait? Start funding now.

• If you are already contributing to your employer’s retirement plan (at least up to the amount your employer has provided) and you are already funding a Roth IRA, start funding a taxable account. This is sometimes called a brokerage account. Saving in a taxable account always makes sense, as capital gains tax is currently cheaper than the regular income tax rates.

• Give generously to others. After organizing your finances, you will likely find that you can afford to help others financially. This is one of the greatest rewards for being financially secure. Maya Angelou captured the spirit of giving back when she wrote:

“The charities are basically saying, ‘I seem to have more than I need, and you seem to have less than you need. I want to share my surplus with you. ‘ It’s good if my surplus is tangible, money or goods, and good if not, because I’ve learned that being charitable with gestures and words can bring tremendous joy and heal hurt feelings. “

Happy November! Happy Thanksgiving!

Donna Skeels Cygan, CFP, MBA, is the author of The Joy of Financial Security. She has been an Albuquerque royalty-free financial planner for over 20 years and is the branch manager of Mercer Advisors’ New Mexico office. Contact them at [email protected]


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