People around the world look forward to celebrating Lunar New Year, a time to see family, wish one another good fortune, happiness and longevity, and celebrate with traditional food and customs.
“Lunar New Year is when we all look forward to new beginnings and new opportunities,” said Jing Lee, Northwestern Mutual Wealth Management Advisor based in San Jose, CA. “There are a few simple steps you can take in the new year to put you and your family in a stronger financial position so that you’ll be ready for whatever comes next.”
Here are five ways to improve your finances in 2022, the Year of the Tiger.
START YOUR TAX PREPARATION
While you technically have until April 18 to file your taxes, getting a jump on this annual task can pay off in a number of ways. Start things off by making an appointment with your tax preparer. Not only will you have your pick of time slots, but having a date on the calendar will encourage you to start gathering your documents (W-2 and 1099 forms as they arrive and any receipts you’ll need to get deductions). It will also give you a push to review the latest tax bracket changes for 2022 and prepare any questions you might have for your tax pro.
REVISIT YOUR 2022 FINANCIAL PLAN
What better time to review your financial plan to ensure it aligns with your goals than the start of the new year? While your financial situation is unique to you, everyone can benefit from some level of planning, whether you’re in your 20s or 60s.
A financial plan can help with a number of things, including how to save and invest for future goals, manage your debt and protect your finances. Once you have a plan in place, you can focus on some more concrete money tasks, such as creating a budget or checking your credit report.
CONSIDER AN IRA
If one of your goals this year is to invest and/or save more for retirement, an individual retirement account (IRA) is a great way to accomplish both.
“There are two types of IRAs to know. With a traditional IRA, contributions are made pre-tax. When you’re ready to withdraw the money in retirement, you’ll have to pay taxes on it,” said Lee. “A Roth IRA is funded with after-tax dollars, but you’ll typically get to withdraw it tax-free come retirement.” *
While there’s no one answer to how much you should contribute to an IRA, know that you can save up to $6,000 ($7,000 if you’re 50 or older) for the 2022 tax year from now until April 15, 2023. And if you didn’t max out your 2021 contribution, you have until Tax Day to do so.
TAKE STOCK OF YOUR CREDIT CARDS
New year, new credit card? With overall debt levels on the decline, nearly 27 percent of U.S. consumers applied for a card last year. While the perks of a new credit card can be lucrative — think sign-up bonuses or a 0 percent introductory rate — you’ll want to make sure having another credit card is in line with your spending and savings goals before opening a new account.
MAP OUT YOUR CAREER GOALS
In addition to being financially motivated, your 2022 aspirations might also be career related. Whether that means getting ahead in your current role or changing jobs all together, it’s important to set clear professional goals for yourself and identify what will help you achieve those goals – steps such as updating your resume, refreshing your digital presence, exploring your company’s career resources and reaching out to your network.
With these steps in mind, we wish you a happy and prosperous Year of the Tiger!
* Distributions may be subject to ordinary income tax and may be subject to a 10% IRS early withdrawal penalty if taken before age 59 ½. All investments carry some level of risk including the potential loss of all money invested.
Northwestern Mutual has been helping people and businesses achieve financial security for morethan 160 years. Through a holistic planning approach, Northwestern Mutual combines the expertise of its financial professionals with a personalized digital experience and industry-leading products to help its clients plan for what’s most important. With $308.8 billion in total assets, $31.1 billion in revenues, and $2 trillion worth of life insurance protection in force, Northwestern Mutual delivers financial security to more than 4.75 million people with life, disability income and long-term care insurance, annuities, and brokerage and advisory services. The company manages more than $200 billion of investments owned by its clients and held or managed through its wealth management and investment services businesses. Northwestern Mutual ranks 90 on the 2021 FORTUNE 500 and is recognized by FORTUNE® as one of the “World’s Most Admired” life insurance companies in 2021.
Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, WI (life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries. Subsidiaries include Northwestern Mutual Investment Services, LLC (NMIS) (investment brokerage services), broker-dealer, registered investment adviser, member FINRA and SIPC; the Northwestern Mutual Wealth Management Company® (NMWMC) (investment advisory and services), federal savings bank; and Northwestern Long Term Care Insurance Company (NLTC) (long-term care insurance).