Your financial planning calendar

Cleaning up personal finances remains one of the top New Year’s resolutions. But we all know what happens to most such self-promises, so here’s a month-by-month to-do list to cultivate better financial health. 

February: This month just ended, but its never too late to start planning.  Are your financial documents in order, are they printed or stored in a digital format? Is your financial information at your fingertips?? If you haven’t done it yet, take some time to organize important paperwork in one place (i.e. financial information). Keeping these documents in order, printed or stored in a digital format, will be of great help in case of an unforeseen event.

March: Consolidate your investments. Evaluate how many accounts you have and consult your financial planner on whether you should consolidate your 401(k)s into individual retirement or brokerage accounts. Spreading your assets across various accounts is not smart diversification – it’s a recipe for potential confusion.

April: Tax smarts. Did you contribute to an IRA for your spouse, max out your contributions to your defined contribution plan at work (401(k), etc.), or contribute to your IRA by the April 15th deadline? Did you track your losses on your taxable accounts, such as individual and joint investment accounts, bank accounts, and money market mutual funds, to name a few? These strategic steps can qualify you for tax credits.

May: Follow the money. If you are still working and are too busy with your daily responsibilities, you may not have a full grasp of your personal cash flow, the money that comes in, and where you spend it. You can’t establish how much you save or spend without knowing where you stand right now.

June: Investment smarts. Are your investments allocated wisely to minimize taxes? How much risk do you take?

July: Know your net worth and why it matters. There are many ways to calculate your net worth; that is all your assets, such as your home and retirement funds, minus all your liabilities such as your mortgage and credit card debt. A sophisticated net-worth calculation projects factors of asset growth, such as rates of investments’ returns and risk as well as your rate of saving and liabilities to the end of your life. Your goal for this month would be to minimize the risk of outliving your assets.

August: Insure against risk. Insurance can keep you financially secure if disaster strikes, so make sure to review your policies. Did you outlive your 20-year term life insurance? If so, you need to consider extending your coverage. Have you considered long-term care insurance? This coverage will help with the costs of basic daily needs over an extended period.

September: Retirement planning. This planning usually starts in your 20s and does not end when you retire. If you’re employed, know when you can afford to retire.

Are you aware of all the existing strategies to maximize Social Security payouts? If you are retired, are you withdrawing from your accounts in the correct order? Start with your taxable holdings, then move on to tax-deferred and then untaxed. Annually calculating optimal distributions from IRAs and other taxable income sources can trim your taxes.

October: Gift wisely. You can give back in many ways to organizations and people you care about with donations of appreciated securities or through payments on college loans or new mortgages.

Your greatest gift may be taking care of yourself. This way, you won’t eventually risk becoming a financial burden to your adult children.

November: Preparing for the inevitable. Engage an estate attorney. If you pass away without a will, your state of residency will distribute your assets with no input from you.

If your estate documents were prepared a few years ago, be sure to have them updated. Everyone will be more secure with up-to-date estate documents such as wills, living wills, medical health-care directives, and powers of attorney to stipulate your wishes if you become unable to decide matters yourself.

Moreover, you will need these documents if you or your partner (or maybe both) are uncomfortable with financial matters and your children or dependents are not of legal age.

Also, draw up or re-examine these documents if:

  • If you recently remarried;
  • You own property in more than one state,
  • You have privacy concerns,
  • You own a business, or
  • Your family must consider special needs.

December: Reality check. If you followed these steps, you’re one of the few individuals with enough perseverance to tackle financial planning. Set up a meeting with your financial planner to discuss your progress and determine the next steps.

We can help you implement this monthly to-do list. Contact us today to get started!

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