Cleaning up personal finances is a common New Year’s resolution, yet it’s easy to let it slip as the year progresses. Here’s a practical month-by-month to-do list to help you maintain financial wellness all year long.

Winter Preparation: January – March

January: Organize Paperwork

This obvious starting point eludes many. Are your financial documents organized, in paper or virtually, so information is at your fingertips? Your heirs will be eternally thankful if you unexpectedly die or are incapacitated.

February: Consolidate Investments

Trim your number of accounts and consolidate all your dormant 401(k)s into individual retirement accounts. Spreading your assets across various brokerage accounts is not smart diversification – it’s a recipe for confusion.

March: Track Cash Flow

Follow the money. If you’re still working and too busy with your life, you may have a poor sense 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 are right now.

Spring and Summer Savvy: April – July

April: Tax Season Strategies

Tax smarts. It’s better to owe your state and the federal government instead of overpaying throughout the year.

Did you fund an IRA for your spouse, max out funding on your defined contribution plan at work or fund your Roth 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 moves can qualify you for tax credits.

May: Review Investment Costs

Investment smarts. How much do your investments cost you? Do you know what your insurance agent, 401(k) plan, or financial advisor charges? How about the underlying expenses you pay to buy mutual funds or exchange-traded funds?

Are your investments allocated wisely to minimize taxes? For example, do you hold real estate investment trusts in your tax-deferred account? Municipal bonds in your taxable account? How much risk do you take?

June: Calculate Your Net Worth

What are you worth and why it matters. You can calculate your net worth (all your assets, such as your home and retirement funds, minus all your liabilities, such as your mortgage and credit card debt) many ways. A sophisticated net-worth calculation projects factors of asset growth, such as rates of investments’ returns, as well as risk and your rate of saving and liabilities to the end of your life.

Your goal: Minimize the risk of outliving your assets.

July: Update Insurance Policies

Insure against risk. Insurance keeps you financially whole if disaster strikes. To cite two examples of policies to review, did you outlive your 20-year term life insurance? If so, you’re a winner because you remain alive, yet you need to consider more coverage.

Fall Focus and Final Checks: August – December

August: Refine Retirement Plans

Retirement planning. This planning starts in your 20s and does not end when you retire. If you’re employed, know when you can afford to retire (assuming you’re not laid off).

Are you aware of all strategies to maximize Social Security payouts? If 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.) Calculating optimal distributions from IRAs and other taxable income sources annually can trim your taxes.

September: Give Back Thoughtfully

Gift wisely. You can give back in many ways to organizations and people you care about with donations of appreciated securities or with payments on college loans or new mortgages. The Internal Revenue Service offers several guidelines on gifting.

Your greatest gift may be taking care of yourself, so you don’t eventually become a financial burden to your adult children.

October: Prepare Estate Documents

Prepare for the inevitable. Engage an estate attorney. If you die without a will, your state of residency distributes your assets with no input from you.

If your estate documents are older than about seven years, refresh them. Everyone needs such estate documents as wills, living wills, medical health-care directives, and powers of attorney to stipulate your wishes if you become unable to decide matters yourself.

You especially need these papers if you or your spouse, or both, are uncomfortable with financial matters and your children are younger than legal age.

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

• You’re in a second marriage
• You own property in or reside in more than one state
• You’re concerned about privacy
• You own a business
• Your family must consider special needs.

November & December: Conduct a Financial Reality Check

Reality check. If you followed these steps, you’re in the minority of individuals with the tenacity to tackle financial planning.

But you still should engage a professional advisor to check your assumptions. Be realistic about what you can accomplish on your own.

It’s important to get your finances right and keep them right all year.

If you loved this guide and want to dig deeper – give us a call.

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