In the 30 years I’ve been in the financial planning business, I have been asked many times about ideas and methods for staying on top of your financial life. Many people take the time to put together a financial plan, work on implementing it, then ignore it for years at a time. I’ve always viewed financial planning as an ongoing process rather than a snapshot in time. One way to help you pay attention to your financial plan throughout the year is to designate certain task for each month, and write them on your calendar. Here are some suggestions for doing that.
Start each year by checking your credit reports. You can do it for free once a year at annualcreditreport.com. This is the only official site for your annual free credit report. Also, January is a good time to put together or update your net worth statement. We covered net worth statements in this column on January 7. January is also the time to start your emergency fund if you haven’t already. Try to have three to six months of living expenses saved and kept in a savings account or money market account. Save a little bit from each paycheck until you reach this goal. If you already have an emergency fund established, review it to make sure you have an appropriate amount available.
In February, you’ll turn your attention to gathering your tax documents. Most of the documents you’ll need in order to file your taxes will arrive in late January and early to mid-February. Gather your W2s, 1099s, mortgage interest statements and other receipts and place them in a file, along with anything else relevant to filing your taxes. If you use a professional preparer, February is a good time to schedule your appointment. Next week’s edition of Smart Money Management radio show and this column will be dedicated to tax preparation tips.
March is a good time to fund your IRA, especially if you are contributing for the previous year. For example, contributions must be in the account by April 15, 2024 to count for 2023. April is, of course, the month of the tax filing deadline. If you need more time, you can file for an extension, but any taxes owed must be paid by the April deadline regardless.
Schedule some time in May to check your insurance coverage. First review your coverages to make sure you have adequate amounts for you home, car and umbrella coverage. Also review your life insurance coverage. If you’ve experienced any life events in your life such as births, deaths, marriage or divorce, you may need to make changes or updates. May is a good month to have your furnace and air conditioner checked. Order your second credit report.
In June, do a mid-year financial checkup. Update your net worth statement, check your retirement accounts to see if they need to be rebalanced and consider increasing the amount of your contributions. Check your emergency fund to ensure that you have an adequate amount.
In July, check the beneficiaries on your insurance and retirement accounts. It is simple to change beneficiaries during your life, so make sure your assets will pass to the people you want them to. In August, review your spending budget. If you have a college student, review their spending plan with them. September and October will be the months to work on health and disability insurance. Get the information on your choices for the next year and evaluate your options.
In November, take a look at your tax situation for the current year. If you have taken any capital gains over the course of the year, check to see if you have any capital losses that you could realize to offset the gains. If you have a flexible spending account, check to see if you’ll lose any money that you don’t spend. If you will, make plans to use that money before the end of the year. Finally, in December, make gifts to charities that you haven’t made throughout the year.
For more information, you can listen to the podcast of Smart Money Management radio show on this topic, along with others, at www.alderferbergen.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Guarantees of annuity payments are based on the claims paying ability of the issuing company.
Asset allocation does not ensure a profit of protect against loss.
Securities and financial planning offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.