Optimizing your finances is a constant game of tax planning, fee-avoidance and risk mitigation -- not to mention coming up with ways to increase your income and reduce your spending. Mid-year is a good time to take a look at what you have done so far and what you need to do before the end of the year. Here are five tasks that will only take you a few minutes each. If you can’t get them all done today, think about doing one each day from Monday to Friday of next week. When you’re finished, you, your wallet, and your loved ones will all be in better financial shape.
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Opt out of overdraft protection
As you know, banks can currently allow your account to go negative in order to pay for debit card transactions -- and they charge you for the privilege. Starting in August, banks will have to get your explicit permission to do so. If you’d rather they reject the charges, and save you $35 or more in fees, make sure to opt out through your bank. Alternatively, choose to link your checking account to a savings account or credit card (that you pay off monthly!), which will often cost about $10 or less per transaction.
Review your retirement deferral percentages
Experts recommend that most people contribute at least 10 percent of their salary to retirement accounts such as 401(k)s or IRAs. Check your year-to-date contributions to see how you’re progressing against the maximum 401k contribution limit. If you contribute a set dollar amount, your contribution as a percentage of your salary has gone down if you’ve gotten a raise since you made your election.
If you are already contributing a percentage, you might consider bumping it up by one or two percentage points -- since the withdrawals are made pre-tax, your take home pay will be reduced by less than you contribute. Make sure you are contributing at least enough to a 401(k) to receive any employer match. After that, make any “extra” contributions to a Traditional or Roth IRA.
Check your credit score
Your credit score is a numerical interpretation of the items on your credit report. By tracking your credit score regularly and noticing any sudden decreases, you can make yourself aware of any potentially-damaging items on your credit report. There are many options out there that allow you to check your credit score for free, e.g., CreditKarma.com and Quizzle.com.
If your number is lower than you expected, pull a free credit report at AnnualCreditReport.com, where you are entitled to grab one free report from Experian, TransUnion and Equifax per year. Review your reports and make sure to clear up any mistakes. In the future, pull a free credit report from each of the three major bureaus once a year, staggering them to get a free report every four months.
Review your insurance policies
It’s important to review your insurance policies at least annually to make sure that you are minimizing risk while maximizing value. If you have an old car that isn't worth much, or if you have paid off your car since purchasing your auto policy, you may be able to reduce or drop some coverage. If you have boosted your emergency fund, you may be able to raise the deductibles (and thus lower the premiums) on your home, auto, or liability insurance. And if your house has changed in value (and whose hasn’t), you may be able to change the coverage amount on your home policy.
Update your beneficiaries
First and foremost, you should make sure you have the four most vital estate planning documents (Will, Durable Power of Attorney, Health Care Proxy, and Living Will). But beyond that, it is vital to ensure that beneficiaries on individual accounts are up to date.
Items in a Will must go through probate, which is a lengthy and sometimes costly process. But when specific bank, retirement or life insurance accounts have named beneficiaries, they will usually circumvent the probate process and instead pay the beneficiary immediately upon confirming your death.
In most states, the named beneficiary on an account supersedes any mention of that account in a person’s will. So if you write an ex-spouse out of your will, but still have her listed on your 401(k), she could receive the entire balance of the 401(k) upon your death. If you named your parents but have since gotten married, your husband or wife could fail to receive any of the funds, even if he or she is the sole named beneficiary in your will. And if you have listed a beneficiary who predeceases you, the assets will have to go through probate.
All investment and bank accounts will allow you to name one or more beneficiaries, and all you need is their name and social security number. So take a few minutes to double check that you have named beneficiaries at all, and then that they are up to date.
Pinyo is the owner of Moolanomy Personal Finance Blog, which covers a wide range of personal finance and investing topics, with features that include reviews, comparison guides, and Q&A sections.