10 Financial Tips for Second Quarter
From funding your retirement accounts to making sure you’re on track to meet your 2021 financial goals, there’s a lot you can do in the second quarter to stay on course.
Here are our top 10 financial tips for second quarter.
#1 Review Your Goals, Budget, and Cash Flow
Reviewing your 2021 financial goals quarterly helps you to assess what you’ve accomplished and, if you’re off track, course correct.
If you have to, adjust your budget and cut back on expenses. Also, see where your goals might be a bit unrealistic or where you under budgeted, and then make adjustments.
Also, review your cash flow.
Monitoring what you’re spending your money on helps you analyze what you can cut and apply it toward your retirement savings or savings.
Even if it’s just a few extra dollars, every little bit helps.
If you have debt you’re working to pay off this year, the start of second quarter is an ideal time to review your progress.
If you haven’t been able to meet your debt-payoff goals, don’t beat yourself up. Instead, find out why you weren’t able to meet your goals. Then, course correct.
Remember, the more debt you owe, the less you have to pay yourself and save for retirement or fund your emergency savings account.
No matter the size of your debt, make 2021 the year you make it a priority to get out of debt.
#2 See If You Can Contribute More to Your 401(k) This Quarter
When it comes to saving for retirement, every little bit you save now may help come retirement.
If you think you have to save hundreds more a month to make a difference, think again.
Saving 1 – 2% more this quarter may make more of an impact in the long run than you think.
Let’s say you make $50,000 a year and you are paid monthly. If you saved an additional 1% of your salary, you’d have an additional $41.66 per month taken out of your paycheck and put into your 401(k). If you contributed 1% more starting in April, you could save an additional $375 between now and December 31, 2021.
Continuing with the example above, if your budget is maxed out, you could easily cut a subscription service you rarely use or pull back on ordering in to come up with the $41.66 each month.
Take a look at your budget and see if you can save 1 – 2% more this quarter.
If you’ve recently received a raise, bump up the additional savings 3 – 5%.
#3 Fully Fund Your IRA for 2020
If you have an individual retirement account (IRA), and you haven’t fully funded it for 2020, you have until April 15, 2021, to do so.
The 2020 and 2021 contribution limit for IRAs is $6,000, and the catch-up contribution for people age 50 and over is $1,000, or $7,000 total. This applies to Roth and traditional IRAs.
If you haven’t maxed out your 2020 IRA contributions, see what you can do before April 15, to max it out. Remember, every little bit helps so, if you only have an extra $300 to contribute, do it.
If you aren’t regularly contributing to your IRA, now is the time to plan monthly contribution amounts for 2021. If your provider allows it, set up automated deposits.
[Related Read: Retirement Plan Contribution Limits for 2021]
#4 Rebalance Your 401(k)
It’s the second quarter, which means it’s a perfect time to rebalance your 401(k).
When it comes to the market, the only constant is change. The stock or mutual fund that you chose last quarter may or may not necessarily still be going in the right direction for you.
Which is why this financial tip for second quarter may help you earn and keep more of your hard-earned money.
We recommend rebalancing your account allocations every quarter, or four times a year.
This way, you can make the appropriate changes in order to stay on course with your savings goals.
[Related Read: How Rebalancing May Boost 401(k) Returns in 2020]
#5 Read Your 401(k) Statement
Opening and reviewing your 401(k) statements helps you determine whether or not you are on track to meet your retirement goals.
However, many investors fail to even open them, much less read them. Those that do often don’t understand what they’re reading.
If you want to understand what is happening with your hard-earned money, you need to read your statement every time you receive one.
If you don’t understand what you’re receiving, then reach out to an expert for help.
Doing so may have a big impact on your overall returns and confidence about achieving your goals for retirement.
Watch the video below to see how to read a 401(k) statement.
#6 Contribute More to or Start Funding an Emergency Savings Fund
We can’t stress enough the importance of this financial tip for second quarter.
It was only a year ago the world literally shut down and left many without the ability to work. And many people were left wishing they had more emergency savings available.
Whether it’s a global lockdown (let’s hope that never happens again!) or a sick family pet, the car needs new tires or your computer is on its last leg, we never know when an emergency will happen. Or how much it will cost.
If you have an emergency savings account and have goals to regularly fund it, take the time now to review your progress.
- Are you on track to meet your savings goals by the end of the year?
- If not, see what expenses you can cut to put more into your rainy day fund.
If you don’t currently have one, make a plan to set aside some money before the end of the year. Even a few hundred dollars can make a big difference.
#7 Get Your Taxes Done, If You Haven’t Already
The IRS has pushed back the 2020 tax deadline to Monday, May 17, 2021. Taxpayers can also delay payment of any money owed the IRS until May 17.
There is also an exception for victims of the February winter storms in Texas and Oklahoma. If you qualify, you can wait until June 15, 2021, to file your 2020 federal income tax return.
The deadline to file extended returns remains unchanged. Extended returns are due by October 15, 2021.
#8 If You’re Expecting a Tax Refund, Give Your Retirement Savings a Boost
Another financial tip for second quarter that may significantly boost your retirement savings is to invest your tax refund.
Instead of spending your refund, invest it in your financial future.
If you invest your tax refund into your 401(k) or IRA, it won’t affect the amount of your take-home pay.
If you add to your 401(k), it needs to go through payroll deduction. We recommend you contact your Human Resources department, tell them the amount you want to invest, and they will take it out of your paycheck(s). Then use your tax refund to live on and make up the difference during this time.
If you have a traditional or Roth IRA, you can use IRS Form 8888 and redirect your refund into your IRA.
Or, if you’re currently set up for automatic monthly contributions from your bank account, make a one-time payment for the amount of your refund.
[Related Read: A Good Way to Spend Tax Refunds Wisely]
#9 Pay Estimated Taxes on Time
If you pay estimated taxes, make sure you’ve budgeted to pay them. The last thing you want is to get stuck with a large tax bill come 2022, so make sure you pay estimated taxes on time.
Despite the IRS pushing back the 2020 tax filing deadline to May 17, Q1 2021 quarterly tax payments are still due by April 15. Q2 estimated taxes are due June 15.
Federal estimated taxes can be paid online at https://www.irs.gov/payments. Many states allow you to pay estimated state taxes through their state department of revenue websites. Check with your state to see if you can pay online or need to mail your payment.
#10 Get Professional Third-Party Help
This final financial tip for second quarter may make a significant impact on your overall financial health and your retirement savings.
It doesn’t matter how far away from or close to retirement you are or how much money you’ve saved. Nor does it matter how much debt you have.
Speaking to a third-party expert now can help you get on track and stay on track with your financial goals.
Think about it this way: Even the best athletes in the world have coaches!