In honor of Passover, the eight-day Jewish holiday that commemorates the Biblical story of the Exodus from Egypt, we’ve found plenty of lessons to glean for our everyday financial lives. The holiday’s alternate moniker, “Festival of Freedom,” reminds us to take stock of where we are—and where we’re going.
Get started with a free financial assessment.
Get started with a free financial assessment.
What old money habits are holding us back? Where do we struggle to gain control in our lives, and how does money affect our progress on those goals?
To help you free yourself from these old mindsets—and because it’s a great pun—we bring you some of the top financial tasks not to “pass over” this year. (And yes, we know the Israelite houses wanted to be passed over in the Exodus story, but we’re taking some poetic license to prove a grander point.)
1. Identifying Your 'Shiny Objects'
It can be easy to overindulge when you aren’t keeping close tabs on your spending. Now may be the time to hit the reset button, revisit your budget (or create one!) and identify what’s distracting you from staying on target.
Minding your budget is a great way to help keep “shiny objects” from holding your money captive, says Jeff Gorton, a Certified Public Accountant, Certified Financial Planner™ and Investment Adviser Representative under Alphastar Capital Management. We all have our own money kryptonite—the one thing so tempting we just can’t avoid shelling out for it. Whether it’s your addiction to cute baby clothes or happy-hour specials, find out where you’re overspending.
Got better things to do than pore over old receipts all afternoon? For an easy, all-in-one way to track your expenses and break down how much you’re allocating to each category like entertainment or groceries, try the LearnVest Money Center or the LearnVest iPhone app. And make sure to account for those variable expenses that can sneak up on you (ahem, like those extra taxis you took last month).
How often? Every day. Even five minutes spent reviewing your purchases can keep you on track—and help make a big impact on your bottom line.
2. Factoring in a New Goal or Challenge
To break old bad habits, think about what’s new with your money this year. Maybe you have a new goal (like saving for a down payment) or a particular challenge (your student loans have come due): That’s when it’s time to consider updating your budget and shifting your expectations.
And remember, your budget is fluid. Did you get a raise and want to hack away at your debt faster? Do you expect to spend a lot more on travel this year because your sister’s getting married out of state? “Have an honest review and update of your finances,” says Groton. Need help updating your financial plan to reflect these changes? Plug in your new goal in the Money Center and find out how long it’ll take you to save up.
How often? Once a month. Tackle this task before you’re surprised by any of your spending habits.
3. Checking in on Your Credit
“How many people don’t lock their doors at night?” Gorton asks. “If you aren’t checking your credit scores regularly, you are making it a lot easier for your identity to be stolen.” Checking your score for free with Credit Karma doesn’t just protect you against identity theft; watching your score creep up and up can be a fabulous motivation to keep up the hard work of paying off debt.
Although a credit score may feel theoretical, it has practical implications: A low score can prevent you from nabbing a mortgage, while a strong score can help you nail down better rates. Feeling unenthused about your numbers? Here are some ways to raise your credit score.
While you’re at it, look up your credit report too. Credit scores are quick-and-easy numbers to gain a sense of your progress, but credit reports are the in-depth documentations of all your accounts. Searching for suspicious activity on your report is the best way to know if someone has hijacked your identity.
Some scammy sites claim to provide a free credit report but actually charge; AnnualCreditReport.com is authorized by federal law and enables you to obtain a free report once a year from each of the three main credit bureaus: TransUnion, Equifax and Experian. Did you find an error on your report? Here’s how to dispute it.
How often? Check your credit scores several times a year (once a quarter is a good frequency), and review your credit report three times a year—once at each of the three credit bureaus. Trust us: You’ll probably sleep better with the assurance your credit is safe.
If you were to deduct an additional 1% straight from your salary for your retirement contributions, you’d feel the pinch at first—but almost certainly adjust and stop noticing in a short matter of time.
4. Rebalancing Your Investments
You need a haircut every so often because otherwise your coiffure will become uneven. Similarly, you need to consider regularly realigning your investments to your desired balance. For example, maybe you want 50% of your portfolio to be in the stock market, but your stocks have outperformed and now account for 60% of your portfolio. Counterintuitive though it is, you may need to sell some to get yourself back to the proper proportion. “The stock market has been on a tremendous run over the last five years. If you haven’t rebalanced your portfolio, then you have increased the risk and potential downside of your investments,” Gorton says.
How often? Once a year is all that’s necessary for most, though if you're within five years of retirement, you may want to review your portfolio every six months. If your asset allocation is more than 5% different from your ideal, then reset it, make a calendar reminder to do this again and move on with the better things in life.
5. Reassess Your Retirement Savings
The prospect of saving for a long-term goal like retirement may feel daunting, especially if you’re juggling short-term goals like paying off debt or funding your emergency savings account. But we get used to what we have. In other words, if you were to deduct an additional 1% straight from your salary for your retirement contributions, you might feel the pinch at first—but probably adjust and stop noticing the difference in a short matter of time.
As much as extra savings may feel like a constraint now, the more financial firepower you can get for retirement, the less you’ll have to worry about later. This added oomph can go a long way down the road, allowing you the freedom to visit family, travel the world and live the lifestyle you want without stressing over the details.
How often? Twice a year. Of course, if you’re inspired to increase your savings more frequently than that, don’t let us stop you!
6. Reviewing Your Insurance Policies
Insurance may not be the sexiest topic, but do you know what does feel good? Enjoying the peace of mind that comes from knowing unexpected accidents won’t completely sideline your financial well-being. Did you recently have a baby? You might need more life insurance. Are you a newlywed? You probably want insurance for that wedding ring. Are you worried about your parents’ health? Research long-term care insurance. Did you start a business? Don’t forget business liability insurance. Did you buy a motorcycle? You might want to look into insurance for that too. And the list goes on.
How often? Whenever you undergo a life change or make a very large purchase.
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the people interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.