MARY LOUISE KELLY, HOST:
The holiday season is joyous, also expensive. From steep flight prices to a laundry list of presents to buy, by the time January 1 rolls around, you might feel like your bank account is hurting. Well, happily, our friends at the Life Kit podcast have an answer for everything, including tips for what they call financial self-care. Here's host Marielle Segarra.
MARIELLE SEGARRA, BYLINE: OK, we're going to start with an exercise. It comes from Brent Weiss, who co-founded a financial advice company called Facet. He tells his clients to pick a time horizon - say, three years, five years or 10 years from now - and then ask themselves...
BRENT WEISS: What has to happen for you to look back and say, that was a wildly successful period of my life?
SEGARRA: Brent says your financial goals should get you closer to whatever it is that you want. Setting financial goals is a great annual practice, and you can pick any time of year to do it. But it can help to lump it in with the other financial stuff that you need to do annually - for instance, taxes. There's also open enrollment, which tends to start in November. Brent says a lot of people just let last year's benefits roll over. Don't do that.
WEISS: Take the time, sit down, look at any updates to your health insurance plans.
SEGARRA: And make sure you're happy with your other insurance plans. Also, check on your retirement plan contributions and make sure your beneficiaries are up to date. You can also use this moment to see if there are any benefits you're missing at work, like a gym reimbursement or an employer 401(k) match, and to check on your subscriptions, make sure you're not paying for things you don't use. Also, look at your credit card benefits. Like, maybe you'll realize that one of your cards offers extended warranties on big purchases, and you want to use that in the future.
Another annual task is to check on your investment accounts. Maybe that's a 401(k) or a Roth IRA or a brokerage account. For this one, we're going to turn to Rita Soledad Fernandez Paulino. She says the first thing you'll want to do is look at the rate of return you're getting.
RITA SOLEDAD FERNANDEZ PAULINO: Ideally, you're going to earn at least 10% average over 10 years. There are going to be years where your rate of return is going to be really high, 21%. And there are going to be years that it's low.
SEGARRA: Right. Sometimes stock prices drop across the board for some global reason, like a recession or fears of one, for instance. And as a coach, Soledad sees her clients get nervous when that happens. You know, they want to pull all their money out.
SOLEDAD: And I'm like, baby, everyone - everyone's dealing with that right now, which is why it's so important to compare - to check in to see with how the entire market is doing, not just your portfolio.
SEGARRA: If your investments are doing about the same as the S&P 500, Soledad says you're probably in a good position. But if not, you'll want to rebalance your portfolio.
All right, so that's the annual stuff. Let's move into the tasks you're going to do a handful of times a year. Here's a big one - get a credit report. Every year, you can get a free report from each of the credit bureaus. Those are Equifax, TransUnion and Experian. Brent suggests that every four months you request one from a different bureau.
WEISS: And do yourself a favor - look it over, 'cause there might be something that's up. I actually had an old student loan payment - one student loan payment from when I was, like, 22 that I missed.
SEGARRA: By the way, on the topic of loans and debt...
WEISS: If you haven't looked at your debt in a while, do it now. Make it really easy for yourself. Just list what you have, the balances, the interest rates, the monthly payments, etc.
SEGARRA: Figure out if you need to make any changes. Maybe you should be paying more towards one bill or trying to consolidate your loans or refinance.
All right. Moving on to the monthly stuff. This is just basic financial housekeeping. You want to be paying your bills on time. Soledad says it's a good idea to keep a buffer in your checking account so that you don't overdraft and then get hit with fees.
SOLEDAD: I say between 10% to 25% of your monthly expenses should be kept in your checking account buffer. I say no more than 25% because, again, any money that's in your checking account is not going to be earning interest.
SEGARRA: And then a couple times a month - so every two weeks - look over your accounts for fraud. Like, maybe you'll see a charge from a shoe store, but you didn't buy any shoes. Call your credit card company or report that as fraud online so they can freeze the old card and send you a new one.
KELLY: That was an episode of Life Kit, and you can listen to the full story online at npr.org or in your podcast app of choice. Transcript provided by NPR, Copyright NPR.
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