The start of a new year is the perfect time to reassess your financial situation and set goals for the future. By following a comprehensive checklist, you can effectively manage your finances and work towards financial stability and prosperity.
In this article, we’ll provide you with a month-by-month guide to help you stay on top of your personal finances throughout the year.
The first step towards achieving financial success is to set clear and achievable goals. Establish a budget that accurately represents your income and expenditures.
Analyze your cash flow and identify essential expenses that cannot be reduced, such as groceries, gas, and utilities. Look for areas where you can cut back, such as dining out or unused subscriptions.
February: Simplify Your Financial Accounts
Just as you might declutter and organize your home, it’s a good idea to simplify your financial accounts. Take the time to review all your statements, especially in preparation for tax season.
Consolidate any old 401(k) accounts to streamline your finances and ensure you have easy access to all your account information.
March: Organize for Tax Time
March is the perfect month to get your financial records in order for tax season. The deadline for filing taxes is April 15th, so make sure you have everything ready well in advance.
If you need more time to file, consider filing an extension to extend your filing date to October 15th. Remember that an extension only extends the filing date, not the payment deadline.
If you’re expecting a tax refund, consider saving the money rather than spending it. Add it to your emergency fund if it falls short of the recommended 3-6 months of living expenses.
If your emergency fund is in good shape, think about investing your refund in an account that earns interest. Don’t forget to maximize your contributions to your IRA and HSA before the April 15th deadline.
April: Review and Reduce Debt
Dealing with debt can be a significant burden on your financial well-being. If you receive a tax refund, consider using it to pay down high-interest debts, such as credit card balances.
Not only will this reduce your financial liabilities, but it can also help alleviate stress and potentially improve your credit score.
April is also an excellent time to review your credit score if you haven’t already done so. Many credit card companies offer free credit score monitoring services, or you can obtain a free annual report from each of the major credit bureaus. Keep an eye out for any errors on your report and look for opportunities to improve your financial standing.
May: Focus on Educational Savings
As the school year winds down and summer approaches, it’s essential to consider educational savings for your children or grandchildren.
529 plans are a versatile option that offers tax-free growth for various educational expenses, from traditional schooling to vocational training.
Investing in the education of future generations can help secure their future while enjoying potential tax benefits.
June: Mid-Year Financial Check-In
June marks the halfway point of the year, making it an ideal time to evaluate your progress towards your financial goals.
Take this opportunity to review the budget and goals you set at the beginning of the year and make any necessary adjustments. If your priorities have changed, realign your financial plan accordingly.
July: Set Up for Financial Freedom
July is the month we celebrate our nation’s independence, making it an excellent time to set yourself up for financial independence. Conduct a review of your asset allocation and investment portfolio.
If you work with a financial advisor, ask questions to ensure your holdings are well-diversified and there’s no unnecessary overlap.
While summer can be a time of increased expenses, it’s crucial to practice mindful spending to avoid derailing your larger financial goals.
August: Review and Update Insurance
As August arrives and the back-to-school season approaches, take the opportunity to organize your various insurance policies. Review and update your life, disability, home, and auto insurance to ensure they meet your family’s evolving needs.
Check for any discount programs, such as good student driver discounts, which can help lower your insurance premiums.
September: Consider Charitable Contributions
As the year begins to wind down, September is an excellent time to reflect on your charitable contributions. Take stock of how much you’ve donated so far and determine how much more you’d like to give before the year ends.
By planning your charitable giving in advance, you can allocate your resources effectively and fulfill your philanthropic goals.
October: Enhance Online Security
With the end of the year approaching, it’s crucial to prioritize online security and protect yourself from cybersecurity fraud. Take the time to reevaluate your online accounts and passwords.
Make sure you use strong and unique passwords for each account, incorporating a combination of uppercase and lowercase letters, numbers, and special characters. Enhancing online security by consistently updating passwords is of considerable magnitude.
November: Address Important Family Financial Matters
November brings the holiday season and family gatherings, making it an ideal time to address important financial matters. Review and update your estate documents, such as wills and trusts.
Use this opportunity to have age-appropriate financial conversations with your children and organize all your important financial documents in one accessible place. Taking these steps ensures your family’s financial affairs are in order, providing peace of mind during the festive season.
December: Review Retirement Savings and Tax Strategies
As the year comes to a close, it’s time to review your retirement savings and tax strategies. Evaluate your contributions to tax-deferred retirement accounts throughout the year and consider increasing your contributions for the following year. Aim to save at least 15% of your salary, including employer contributions, in your retirement accounts.
If you turned 73 in 2024, make sure you’ve taken your Required Minimum Distribution (RMD) from your traditional, rollover, SEP, or SIMPLE IRA. Check the provisions of any inherited IRAs, regardless of age, to avoid costly mistakes.
Consider tax loss harvesting in your investment portfolio to offset income taxes. This strategy involves selling investments at a loss to lower your taxes for the current taxable year.
