The following is a guest post by Tony Steuer, an advocate for Financial Preparedness and the author of GET READY!, and the founder of the Get Ready Initiative. If you’d like to contribute a guest post to Money Q&A, be sure to check out our guest posting guidelines.
You’ve resolved to get a handle on your finances in 2020, but will that determination wane by March? With over 80% of people failing to realize their New Year’s resolutions, it’s likely that you’ll become overwhelmed with checklists and budget-tracking within just a matter of months.
That’s why I suggest taking one simple action item each month that will contribute to an overall healthier financial life. This will make things simple while keeping you accountable year-round.
Below the MOST important action item each month to keep your finances in shape:
January: Review your budget and cash flow as well as your net worth statement. This lets you see how you did last year and if you want to make any changes for the new year. You have to know where you are so that you can know where you are going. It’s similar to how maps indicate that “you are here”, so that you can orient yourself.
February: Organize tax documents and receipts. It’s also a great time to organize all of your other financial documents that are not tax-related. You can also use this as your annual time to destroy no-longer needed financial documents. It’s like spring cleaning for your finances.
March: Review your investments and allocations. Your investment allocations may change due to changes in goals, stage of life or uneven performance. You’ll want to make sure you are still on track for major goals such as retirement savings. You should also review your investments to check for options that may perform better or have lower fees and expenses.
April: File federal and state income tax returns. Tax returns are due on April 15 (if April 15 is on a weekend, the IRS and individual states usually extend the due date to the following Monday but check the IRS and your state’s tax websites to confirm). Request extension(s) if necessary. States have different rules, so check with your state tax authority. Fines and penalties can be assessed for missing deadlines.
May: Order credit reports and other consumer reports. You are entitled to order a free copy of your credit report from each of the major credit reporting agencies (Equifax, Experian, and TransUnion) every 12 months at www.annualcreditreport.com (or by calling (877) 322-8228). This website is the only one that is government authorized to provide you with free copies of your credit report.
June: Review retirement plan contributions and projections to see if you are on target. There are many free retirement calculators available online. If you have a retirement plan through a large employer or with an investment firm such as Schwab, Vanguard or Fidelity, they have free tools and will already have some or all of your information. This includes ordering your Social Security Benefit statements to ensure your earning are reported correctly so that your benefits are accurate.
July: Hold a family financial meeting. Review old goals and set new ones. Be sure to invite all stakeholders, schedule it like you would a business meeting, designate roles, create systems and set clear goals.
August: Review estate plan and estate planning documents to make sure they are current. This includes wills, trusts, and advance directives. Consider if beneficiary updates are needed for retirement accounts and insurance policies.
September: Review insurance policies to prep for November by making sure coverage still meets your needs and preparing to adjust accordingly. Consider whether you can make changes that will lower your premiums such as applying for a discount, replacing coverage or covering uninsured risks such as flood or earthquake insurance.
October: Review your financial first aid kit. Whether you are using an online service or the GET READY! Planner and binder system, make sure that everything is up to date and organized.
November: Open enrollment for group employee benefits and individual health insurance begins. This is the one time of year where you can make changes to your group insurance benefits and flexible spending account contributions. Please note that some companies have different open enrollment periods and there are special enrollment periods for group employee benefits and individual health insurance including Medicare.
December: Wrap up any loose ends from your financial year. If you missed a monthly action step, this is a great time to complete it. Keep an eye on your holiday budget so you don’t take on any debt. Lastly, consider charitable donations. Make any year-end donations to support your favorite nonprofits to make a positive difference and to be able to claim your tax deduction.
Having continuity and a plan to deal with repeating occurrences in your financial life will help you stay ready and will actually save you time and effort. Setting up your financial calendar will help to ensure that you don’t miss any important dates and that you are regularly monitoring what needs to be reviewed, allowing you to maximize your finances and minimize your expenses. This will help you tell your best financial story.
About Tony Steuer
Tony Steuer is an author and advocate for Financial Preparedness. Tony Steuer, CLU, LA, CPFFE, helps people make sense of the financial world in a way that’s easy for them to understand.
His books, including GET READY!, Insurance Made Easy and Questions and Answers on Life Insurance have won numerous awards. Tony is the founder of the Get Ready Initiative which includes the Get Ready financial organization system, the Get Ready Financial Preparedness Club, Get Ready Podcast and the GET READY! Financial Principles.
Tony served as long term member of the California Department of Insurance Curriculum Board. Tony is regularly featured in media and has been interviewed for the New York Times, the Washington Post, Fast Company.com and other media and appeared as a guest on shows like ABC’s Seven on Your Side. Tony offers financial preparedness tips and resources at www.tonysteuer.com.