With the start of a new year comes New Year’s resolutions. Many will focus on physical wellness, some on organization. Now is a perfect time to take stock of your financial house and work on financial wellness, which will take off a level of stress that can immediately have an effect on your physical well-being.
In fact, seven out of 10 American workers say financial concerns are their most common cause of stress; nearly half say they find dealing with their financial situation stressful.
MassMutual suggests taking five steps toward improving financial well-being which, in turn, will support your physical well-being in the new year:
1. Make a will. A MassMutual survey of Americans between ages 45 and 60 revealed three out of five respondents do not have a will. If you are one of those people, make it a priority in the new year to create a will to ensure your loved ones are protected. It is also important to update beneficiary information and review it annually.
2. Improve your credit score. Boosting your credit score is a lot like going to the gym — it can be painful at first, but is ultimately worth the (financial) effort. Late payments — one of the top “credit busters” — can impact your credit score, so make sure you pay your bills on time each month and pay off balances as quickly as possible (especially on ones with high interest rates).
3. Save more than you spend. Saving money is a time-tested way to improve your financial situation over time. A good rule-of-thumb is to save at least 10 percent of your net income each year.
4. Don’t leave your 401(k) behind. The growing use of automatic enrollment in 401(k) plans and shorter job tenures are contributing to an increasing number of inactive 401(k) accounts, according to a U.S. Government Accountability Office report. If the new year brings you a new job, or retirement, be sure to rollover your 401(k) to your new employer-sponsored account or an individual retirement account if you are leaving the workforce. And, if you’re not yet contributing to a retirement plan, do so and ensure you save at least enough to enjoy your employer’s match if there is one. Don’t leave any free money on the table.
5. Establish an emergency fund. Whether it is a job loss, health emergency, or car or home repair, an emergency fund provides a cushion to help you cover unexpected costs without interfering with your financial goals. Include backstops like disability income insurance to protect your income stream should you become seriously ill or injured, and consider life insurance with options that give you access to cash for life’s priorities, such as whole life insurance.
For more tips to help your financial well-being, visit massmutual.com.