Financial Planning in the New Year

Hubs and I are both very frugal and were raised with solid financial principles:  work hard, save money, avoid credit card debt, drive a used car, clip coupons, and look for bargains.  Thanks to our parents’ influence, I’m proud to say that we are debt-free except for out tiny mortgage payment! While we’re thankful for the solid foundation our parents gave us, good financial management goes beyond avoiding credit card debts and putting every penny you can into a savings account. I’ve often wondered what more we can do to prepare for the future, but here’s where our parents were (and still are) somewhat clueless. While they have 401K’s my parents have always  joked that their retirement plan is to find a bag of money on the side of the road. 😉 Some days in this struggling economy it seems that plan might be more plausible expecting investments to regain value!

Last week my MOPS (Mothers of Preschoolers) group had a financial counselor share some of his opinions about which steps to take next. Here’s my oversimplified takeaway:

1. 529 College Saving Plan –   Higher education costs increase at 2.5 times the inflation rate. The 529 plan offers the most flexibility and control for college savings.

2. 401K – If your employer will match your contributions, contribute the amount that will be matched, but contribute additional funds to a Roth IRA.

3. Roth IRA – Contribute if you are disciplined enough to do so on a monthly basis. If you’ll only be contributing whatever you happen to have left at the end of the year, you might be better off with a 401K alone.

While the doomsday/preparedness side of me is still somewhat hesitant about the risks of contributing to these plans, it was nice to have them demystified.

What are your financial goals for the new year? Whether you’re using bill consolidation to keep afloat or are living a debt-free lifestyle with a retirement plan set in place, I hope you’ll move forward in creating and sticking to proactive financial goals in 2012.


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  1. My early childhood PTA group just had a financial planner too and he said very similar things. We are trying hard to get our finances in order so we are able to do these things. It worries me to think about not having enough money for retirement.

  2. Thank you so much for the information! We are very big planners in my family. Both of my kids have college funds set up. We try to avoid credit card debt at all cost! Great post!

  3. As soon as this baby is born we need to set her up with a 529 plan too. We contribute to my daughter’s from time to time but really need to set up monthly contributions so we can be sure to help her out.

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