Step 2: Check in with your retirement savings
Next, take a look at your accounts and see if you are on pace to meet your goals.
Measuring your progress has nothing to do with how much money you have in your bank account. Balances can fluctuate with the markets and aren't necessarily an accurate measurement of how well you're looking after your finances, Richardson says.
What you should look at instead is what kind of progress you are making with increasing contributions to your tax-favored retirement plans like a 401(k) or Roth IRA.
"I like the challenge of increasing my 401(k) contribution by 1% each year," she says. "I think a good strategy would be to max out those tax-favored plans."
Setting an attainable goal to continually grow your contributions can make it easier to stay on track.
"That growth feels really good and makes you more inclined to keep doing it," Richardson says.
Step 3: Do some financial housecleaning
Finally, do some financial tidying up to make sure everything is up to date. Among items worth reviewing are:
- Review your health savings account contributions.
- Consider making tax-deductible donations to charity.
- Make sure you are on pace to max out your Roth IRA contributions, if you have an account. The 2022 contribution limit for investors under 50 is $6,000.
Additionally, if you've had a major life change since the beginning of the year, such as getting married or having a baby, you'll want to make sure your employer updates your tax withholdings on your paycheck and your bank account updates your name if you've changed it.
"Make sure you're checking in on your withholdings," Richardson adds. "Nobody wants to get a tax bill because their withholdings were incorrect."
