All The Right Money Moves – 3 Key Financial Tips for 2018

To help you and your family make all the right money moves for 2018, financial planner Lex Byers offers 3 key tips that could help you grow your 401(k), avoid financial ruin and adjust to the new tax rules signed into law by President Trump.

“In the ever changing financial planning landscape, getting ahead financially is tough unless you set up a plan and stick to it,” says Lex Byers, a financial planner in Las Vegas. “Doing an annual financial check-up,” he stresses, “is only worthwhile if you use it as a jumping off point to build good habits.” To help you and your family make all the right money moves for 2018, Lex offers these 3 key tips that could help you grow your 401(k), avoid financial ruin and adjust to the new tax rules signed into law by President Trump.

Tip #1 – Insurance may not be sexy, but it is the foundation of any financial plan.

Insurance protects people from catastrophic losses that can wipe them out. So January’s the perfect time to make sure your family has enough life insurance to pay for the kids’ college, keep current on the mortgage and fund other living costs in the event you or another breadwinner in the family dies, causing a loss of income. “Check all of your insurance coverage,” especially if your life has undergone changes, such as having a child,” advises Lex Byers.

That means making sure your house, car, health and life is adequately insured against events that could put your family in financial peril. Other basics not to overlook are making sure your will and estate plan are updated and all your financial accounts have the proper beneficiaries.

Tip #2 – Adjust your personal tax plan to compensate for the new rules.

The new tax law means most Americans’ tax bills will change. Some will pay more and many will pay less. Many long-standing deductions, such as home mortgage interest and state and local taxes, have been cut or eliminated. Taxpayers should analyze how to best take advantage of any benefits they receive. Perhaps more important, figure out how to minimize financial damage caused by changes to the tax code that reduce take-home pay or make owning a home more expensive.

“People living in high-cost states that are either approaching retirement, in line for a new job in another state or who aren’t happy where they’re living now, might want to consider moving to a low-tax state, such as Florida,” says Lex Byers.

Simpler moves include reducing the money withheld from your paycheck for taxes if you’re getting a cut, or boosting your withholding if you expect to pay more in taxes. “It also makes financial sense to direct some or all of your tax windfall to your retirement account, or 529 college savings account, which can now be used to pay for private school from elementary school onward.

Many investors’ portfolios today may be more risky than they think. A portfolio that once had 60% in stocks and 40% in bonds, for example, may now have a stock weighting of 70% or more.

“I encourage people to look at their holdings and make sure they are not overexposed to risk that they are not prepared to handle,” Byers says. To reduce risk, investors should rebalance their portfolios, or get back to their initial asset mix of, say, 60% stocks and 40% bonds, he says.

Tip #3 – Home Ownership may not be the golden goose for tax deductions anymore.

With fewer deductions, housing isn’t as financially friendly to homeowners, especially in New Jersey and California and other pricey, high-tax states along either coast. Now’s a good time to see if the house you’re living in or the new house you’re eyeing or the second home you’ve been dreaming about is still affordable.

Does it mean you shouldn’t own a home or buy a home? No. A house isn’t only an investment, it is a place to live. But with the new tax rules, it could hit the second-home market as well as keeping people from moving up to bigger primary homes. “It will be harder to afford housing because the government isn’t subsidizing it as much,” says Lex Byers.

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