Managing your personal finances is an ongoing process that requires discipline. Most people are successful at making sure the bills get paid and often saving a little on a regular basis, however, managing your finances effectively is more than just handling the daily or monthly tasks. There are other financial events that occur throughout the year that you should address. Here is a monthly calendar that can serve as a guide to tackling some of these other issues.
- Establish your financial goals for the year and create a plan to accomplish them. If your goal is to save on a regular basis, establish an automatic savings plan to have a certain amount transferred from your checking account to your savings account each month.
- Review your investments to ensure your asset allocation matches your time horizon and risk tolerance.
- Prepare a personal balance sheet.
- Start to get your information organized for filing your tax return.
- Be sure your important financial information is organized, and family records are stored appropriately.
- Investigate whether you are eligible for a health savings account that allows you to use pre-tax contributions to pay for eligible medical and healthcare expenses.
- Create or update an inventory of your belongings for insurance purposes. Use the video feature of your smartphone to capture a record of your household belongings, and be sure to store a copy in a secure location away from your home.
- Review your insurance policies to ensure you have the coverage you need, including an umbrella liability policy. Be sure to check the deductibles.
- Be sure your tax returns are filed. You can file for an extension if you need more time but that does not delay when you may need to pay the amount due.
- Safely dispose of tax information that is no longer needed. The IRS only has three years to begin an audit unless you do not report all your income or file a fraudulent return. You generally only need information for three years from the due date of the return when you report the information, but you will probably want to keep copies of your tax returns forever.
- Check your credit report to guard your financial identity. You can get a free credit report from www.annualcreditreport.com.
- Review your borrowing. If it is getting excessive, take steps to bring it under control.
- Review your mortgage to determine if you should consider refinancing.
- Review your investments to make sure your portfolio matches your goals.
- Perform a mid-year checkup of your finances to ensure you are living up to the financial resolutions you set in January.
- Use an online retirement calculator to determine if your savings plan will provide the funds needed for the retirement lifestyle you want.
- Use some spare time to learn more about investing or handling your finances in general.
- There is still time to make changes that will have an impact on the current year.
- As your children or grandchildren get ready to go back to school, consider how their college educations will be financed. Look into establishing custodial accounts, Coverdell Education Savings accounts or a Section 529 plan for them.
- Review the steps you are taking to prevent identity theft and to protect your electronic records.
- Review your estate plan. Recent changes to the estate tax laws have raised the threshold on what size estates are subject to tax. But estate planning is more than just taxes. Be sure you have other documents that are important — durable power of attorney, power of attorney for health care and a living will. If you have moved, divorced or had new children or grandchildren, you should be sure your estate plan has been updated.
- You should also make sure the beneficiaries on your retirement plans, IRAs and life insurance are still appropriate.
- Review your charitable deductions for the year. Consider giving appreciated stock that you have held for more than a year if you wish to make a large contribution to your favorite cause.
- If you are self-employed or have a small business, make sure your retirement plan is up to date.
- Review the details of your employer’s retirement plan. If you participate in a 401(k) plan, be sure you are contributing enough to get the full employer match contribution. Review your investment allocation as well.
- Review any insurance offered by your employer to make sure you have made choices appropriate for your situation.
- Discuss your finances with your family. Keeping them informed can reduce stress and anxiety if something unfortunate happens.
- Review your investment portfolio and your investment results for the year. If you have realized capital gains and unrealized capital losses, consider taking a loss to offset earlier gains.
- Spend a little time to create your financial resolutions for the next year and write them down.
The suggestions on this calendar may not match your personal financial schedule. However, it can serve as a reminder to make sure you address important issues.
[For everyday banking and mortgage needs, we’ve got you covered. But you should consult a financial advisor, tax professional or insurance agent as appropriate for all other topics.]