3 Personal Money Moves for Q2

No two people spend or save the same way. What works for you may not work for someone else. 

But there are tried-and-true ways to save more and build wealth for retirement. 

Use the following 3 personal money moves to guide your financial decisions in Q2, and your checking account, savings account, and retirement account may look quite different at the end of the year.

#1 Pay Yourself More

According to Statista, the number one New Year’s resolution for 2024 was “to save more money,” with 59% of those polled listing it.¹ 

If saving more is one of your goals, the best way to do it is to pay yourself first – and pay yourself more. 

Paying yourself first means taking a percentage of every paycheck and investing it in a retirement account or other savings vehicle. And do it before you pay anyone else (i.e., bills, businesses, etc.).

Start by paying yourself first if you aren’t already.

If you are already doing it, see if you can increase how much you contribute to your 401(k) or IRA.

If you don’t think you have room in your budget to increase how much you contribute to your 401(k) from your paycheck, look for other areas in your life where you can cut back.

If you are hard-pressed to boost your savings, it may mean you are overspending or living beyond your means. 

#2 Build Your Emergency Fund

A 2024 Bankrate survey found that “only 44 percent of U.S. adults say they would pay for an emergency expense of $1,000 or more from their savings. […] Without savings to fall back on, 35 percent say they would borrow to pay a $1,000 unexpected expense, either by financing with a credit card and paying it off over time, taking a personal loan or turning to friends or family.”²

This is a problem.

Emergencies happen. And they are often costly.

There will be a bill, whether it is a sudden need for new tires, an emergency dental procedure, a required plumbing visit, a natural disaster, or a medical emergency.

How will you pay this unexpected expense without an emergency fund? 

Will you have to borrow money or put it on a credit card? Either way, you’ll end up in debt. 

The last few years have been financially challenging for many Americans.

As a result, a high number of Americans have turned to taking hardship withdrawals from their 401(k) accounts. 

According to Bank of America, “15,950 participants took hardship distributions during Quarter 3, which is up 36% from 2022.”³

Additionally, Vanguard’s How America Saves 2023 Report claims, “In 2021, overall hardship withdrawal activity reverted to pre-pandemic levels from 2019, and in 2022, hardship withdrawal activity increased to a new high.”⁴

Without an emergency fund, people were forced to borrow from their future. 

401(k) hardship withdrawals have consequences, and they should only be sought in extreme situations.

This is why it is critical to build your emergency fund. And do it now. 

Set aside money every month to build up this fund. 

Sell unused items and put the money you make toward this fund. Consider a side hustle just long enough to boost your savings for emergencies.

#3 Get Professional Help

If you have never been taught how to choose your own investments or simply don’t have the time to do it, having someone to help manage your 401(k) may have big advantages. 

Aon Hewitt and Financial Engines conducted a study from 2006 to 2012 comparing the returns of investors who sought help in the form of online sources or managed accounts to those who managed their 401(k)s themselves.

The study revealed, “If two participants—one using Help and one not using Help—both invest $10,000 at age 45, assuming both participants receive the median returns identified in the report, the Help participant could have 79 percent more wealth at age 65 ($58,700) than the Non-Help participant ($32,800).”⁵

However, not all professional 401(k) management companies are created equal.

A robo advisor managed account is where an investment service selects a group of funds and packages them in an investment portfolio for you. 

There is little personalization; many only rebalance annually, and personal risk tolerance is rarely considered.

Compare that with a personalized professional managed account where your 401(k) is personally managed by a person or team. 

Personalization occurs using the investment options that are offered, and a personalized strategy – tailored to your unique situation and risk tolerance – is designed using the full menu of investment options in your 401(k) plan. 

When you have professionals personally managing your 401(k), like we do at 401(k) Maneuver, the focus is on the outcome, not a cookie-cutter approach to investing based on your retirement date.

We are not robo advisors – we are real people making decisions on your behalf. And, as a fiduciary, we’re obligated to act in your best interest with the goal of improving your account performance, so you have more money during retirement.

Have questions or concerns about your 401(k) performance? Click below to book a complimentary 15-minute 401(k) Strategy Session with one of our advisors today.

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