Every year, millions of Americans resolve to get their financial house in order. Then, as the year slips away, so do their good intentions.
Does this approach sound familiar? If so, don’t give up. Maybe you just need a different approach. This month-by-month financial checklist focuses on specific financial tasks. If you manage to accomplish just a few of them, you should be in better shape financially and be in better control a year from now.
The Big Chill
January: Reviewing and updating your budget at the beginning of the New Year can get you off to a good start. Evaluate last year’s income and expenses, and adjust your plan accordingly. Try to revisit your budget throughout the year to see how much progress you’re making or to identify areas for improvement.
February: By February, you should have your Form W-2 from your employer(s). Gather the rest of your tax documents — property tax receipts, mortgage interest, donation receipts, etc. — so you’re ready to meet with your tax adviser as soon as you have all your information. If you’re getting money back, filing in advance of the
April deadline can mean an earlier refund.
March: This might be a good time to check your retirement and other investment portfolios, and compare their performance with a benchmark index. And if your asset allocation has changed, rebalancing can bring it back to its original mix.
April: Federal income tax returns are due on (or around) April 15. If you are expecting a tax refund, consider directing the extra money toward your retirement. Every little bit can add up. Remember, you have until the tax filing deadline to contribute to an individual retirement account (IRA) for the prior year.
May: Consider designating May as “check your credit report” month. You’re entitled to one free credit report annually from each of the three major credit reporting agencies: TransUnion, Experian and Equifax. Check all three reports at the same time or at different times throughout the year. Log on to AnnualCreditReport.com to stay on top of changes or suspicious activity.
June: In June, review your estate plan, beneficiary designations, and the individuals you’ve named as executor and as guardian for your minor children. Changes in your family situation might require adjustments to your plan.
July: July is a good time to schedule an appointment with your financial professional to check that you’re on track with pursuing your goals. Summer is also a good time to start teaching your children valuable lessons about money. Help them establish a savings account at your local bank and encourage them to set aside money each month for wish-list purchases.
August: Make sure your summer fun didn’t upend your budget with a review of your credit card accounts and personal loans. If you’re not making progress with reducing your debt, come up with a plan to pay down your balances faster.
September: September is Life Insurance Awareness Month, so review your coverage to make sure it’s adequate for your family’s needs. Check your disability coverage as well, and consider the need to supplement any employer-provided coverage you may have.
Fall Into Habits
October: October is generally the time for reviewing employee benefits and making choices for the coming year. Contributing to a health savings account (HSA) or flexible spending account for health and/or dependent care can potentially lower your tax bill.
November: Begin year-end tax planning by November to take advantage of strategies that may help minimize your income tax obligation. Waiting too long can deprive you of opportunities. As part of your assessment, consider your investments. Holding on to investments in a taxable account for more than one year will typically qualify you for a lower tax rate when assets are sold.
December: Consider donating to charitable organizations before year-end. Contributions charged to a credit card or paid by check by Dec. 31 may be deductible on this year’s tax return.
John E. Day is a financial consultant with LPL Services, in Columbia. He can be reached at 410-290-1000, email@example.com or www.daywm.com.