We usually wait for the big milestones to re-evaluate our life — and our wallets. But why limit yourself to New Year's, the big age milestones (hello, 35!) or even your official birthday every year? Here are five financial things do on your half-birthday to keep your long-term money goals on point.
1. Get life insurance
OK, sure, we have some skin in this game. Still, we're starting with life insurance because if you hold off until your actual birthday, you could wind up paying more for coverage. Life insurance rates rise alongside your age and the development of health conditions, so the best time to shop is when you're young(er) and health(ier) than you could/will be tomorrow. Seriously, the chart on this page shows you how the price of life insurance goes up over time. (We can help you compare and buy life insurance policies to find affordable protection, even if you're not counting down to 21.)
2. Open a Roth IRA
A Roth IRA is a tax-advantaged retirement account, but unlike its counterpart (the traditional IRA), you don't deduct your contributions on your tax returns. Instead, your withdrawals are tax-free — and that tax exemption applies to any earnings you make on the investment once you reach retirement age.
A traditional IRA might have broader, short-term appeal, but a Roth IRA is worth considering, especially if you expect your income to go up significantly (i.e. you're just starting out in your career). Remember, you pay taxes on Roth IRA contributions at your current tax rate, not your future tax rate, which will increase as your income does. Learn more about Roth IRAs.
3. Up your 401(k) by 1%
Saving for retirement is hard. If it wasn't, the median retirement account balance for working Americans wouldn't be $0, per the National Institute on Retirement Security. Your half-birthday is the perfect time to set the bar low for savings success, while still bolstering your nest egg. Go ahead and up your paycheck contributions by 1% — and commit to aiming higher once your full birthday hits.
The IRS currently lets you contribute up to $18,500 each year to a 401(k) account. If you can't max out, at least meet your employer's match.
4. Check your credit
You should pull your credit reports at least once a year. After all, you can get them for free every 12 months from AnnualCreditReport.com. If you haven't requested your yearly reports, consider your half-birthday a call to check your reports for errors, surprise debts and signs of identity theft. Also, don't be shy about checking your credit scores more frequently. They don't come with your free credit reports, but you can get a free score and credit report overview more frequently from many sites online, including MoneyLion and Credit Sesame.
5. Update your budget
Whether you're behind on inputting your monthly spend, linking new bank accounts to your financial app or increasing your net worth, your current budget is worth a half-birthday pass. After all, a lot of money changes can happen in a short amount of time. Your salary could go up, your utility bill could go down. You could cut a big expense from your monthly obligations — or add one.
Don't have a budget or need a new method to stay on track? We made this simple spreadsheet for you.
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