2020 is not only
the start of a new year—it also marks a new decade full of opportunities for
growth, improvement and forward momentum. One specific area in which many
people could stand to improve is financial management. January is Financial
Wellness Month, making it an ideal time to work toward this goal.
Almost 60% of
Americans consider debt to be a major roadblock in the pursuit of their 2020
financial goals, according to a recent survey from GoBankingRates. This data also reveals that, while one in four Americans are stressed
about finances, only 35% prioritize tools like a budget to track expenses and
Despite a steady
flow of income in most American households, according to the State of the U.S. Financial Capability report:
- 31% cannot earmark $2,000 for a possible emergency;
- 29% forego routine healthcare due to costs;
- 23% have unpaid medical bills;
- 19% sometimes overdraw their checking accounts;
- 19% have been late on a mortgage payment;
- 16% have taken a loan from their retirement plan.
Similarly, in a July 2019 survey of more than 1,700 individuals
throughout the United States about their health insurance plans and
coverage(s), HealthMarkets found that more than 80% of uninsured respondents
who had an emergency either could not afford the costs or required six or more
months to pay off the bills.
might sound harsh, but the upside is that reclaiming financial control does not
need to feel intimidating or inaccessible. If one of your 2020 resolutions is
to be smarter with money, below are three tips to help you jumpstart this goal
toward a secure financial future.
Tip 1: Don’t Overlook
the Importance of Life Insurance.
While 57% of
people in the U.S. own at least some form of life insurance, 43% are still
uninsured, based on 2019 data from Statista. If you are in the latter category, now
is the time to obtain life insurance. If you are in debt, self-employed,
married or starting a family, life insurance is a wise investment, and it tends
to be cheaper when you acquire it as a young person. In fact, most policyholders
in their 20s and 30s pay just $10–$50 a month in premiums for term life policies,
notes Business Insider. If you don’t already have life
insurance, talk to a licensed agent who can help guide you through the process
and determine the type of policy and amount of coverage you need to make an
informed decision that can help safeguard your loved ones in the event of the
Tip 2: Evaluate Your
Current Health Insurance Coverage.
Even with employer
health insurance, one in six Americans make “difficult sacrifices” to fund
their medical costs, and one in five agree that healthcare bills derail their
efforts to save money, according to a joint poll from the Los Angeles Times and the Kaiser Family Foundation.
In addition, this
poll found the average health insurance deductible as of 2018 was $1,350,
compared to just $379 in 2006. As a result, many people who are insured through
their employers are now charged more out-of-pocket than in decades past, according
to the Los Angeles Times. If your current policy is a financial burden,
there are ways to adjust premiums or deductibles through several options in the health
insurance marketplace. A licensed, non-biased insurance agent can help you
review and understand those options.
Tip 3: Start
Making Tax Preparations as Soon as Possible.
tax returns are not due for another few months, this process should not be postponed
until the last minute. The sooner you start planning for tax season, the more
equipped you will be—in terms of both finances and logistics—when it’s time to
stress levels and maximize your benefits by tracking all expense write-offs, organizing
documents, knowing which income tax bracket you’re in, and tucking some extra money
into savings in case you owe the IRS.
In addition, here
are a few more recommendations:
- Check your withholding. To decrease your risk of owing an unexpected amount on this year’s tax
return, use the IRS’s Tax Withholding Estimator, which can determine if you have withheld
enough money from each paycheck. If this withholding amount is too low, then
you will be charged the remainder, so check this in advance and submit a new W-4 document if anything
needs to be adjusted.
- Bunch itemized deductions. Write-offs like mortgage interest, state and local taxes, certain
medical expenses and charitable donations have now been capped at $10,000. If
your itemized deductions are not above that standard amount, push some of these
expenses into the first of the year. This is known as “bunching,” and it can
increase your chances to exceed $10,000 in write-offs.
- Increase retirement savings. If you have an IRA retirement fund, any contributions made to this
account before April 15, 2020, can be written off as deductions if the
IRA provider is notified that you want this money to count for the 2019 tax
year. Additionally, small business owners can deduct as much as 25% of their Simplified
Employee Pension IRA contributions, up to $56,000.
thought of taking hold of your finances may seem overwhelming and difficult,
but it doesn’t have to be. Take advantage of the freshness of a new year—and decade—and
make use of these tips to improve your financial status so you can continue to
maintain financial strength throughout this year and the years to come.
Z. Stahl is the executive vice president and chief marketing
officer of HealthMarkets, one of the
largest independent health insurance agencies in the U.S. that distributes
health, Medicare, life and supplemental insurance products from more than 200
insurance companies. Stahl holds the chartered property casualty underwriter
(CPCU), associate in insurance accounting and finance (AIAF) and associate in
reinsurance (ARe) designations, and earned a bachelor of science in economics
from The Wharton School at the University of Pennsylvania. He lives in Dallas
with his wife and four children.
Erin shows overscheduled, overwhelmed women how to do less so that they can achieve more. Traditional productivity books—written by men—barely touch the tangle of cultural pressures that women feel when facing down a to-do list. How to Get Sh*t Done will teach you how to zero in on the three areas of your life where you want to excel, and then it will show you how to off-load, outsource, or just stop giving a damn about the rest.