Personal finance: Here's a helpful checklist for prosperous new year

It's hard to believe another year has passed, and we're already setting our sights on 2024. And with the arrival of a new year come those old, familiar resolutions. While fitness or organization may be at the top of your list, this is also a great time to reevaluate your household finances.

Experience has taught us that using a checklist is a straightforward way to maintain financial discipline. This approach ensures you examine all facets of your finances, from setting achievable savings goals to creating realistic budgets. Below, we've compiled a list to help you manage your finances effectively throughout the year.

January: Set your goals

Every New Year's resolution begins with a goal, and your financial resolutions are no different. Start by drafting a budget to clearly understand your financial landscape. Take a close look at your cash flow and distinguish between essential expenses, such as groceries, gas, and utilities, and those that can be reduced, like frequent dining out or unused subscriptions.

If you haven’t done so already, now is the time to set or adjust your IRA and 401(k) contributions. Whether you’re just beginning to save for retirement or aiming to increase your savings, a well-planned budget is your first step. Once you have a thorough understanding of your expenses, decide on a specific amount or percentage of your income to invest each month. Remember, even the smallest increases in your monthly savings can make a big difference over time.

February: Simplify

Just as organizing your home may be on your 2024 to-do list, it’s a good idea to do the same with your financial accounts. Remember to look through all statements as they come in for tax season. Do you have an old 401(k) lying around? Consolidating accounts can be a good way to streamline your finances and ensure you have access to all your account information.

March: Organize for tax time

If you got off track in February, that's OK. But now is the time to make sure your finances and records are organized for tax time. Keep in mind that the tax filing deadline for 2024 is April 15. Need more time to file? Consider filing an extension to extend your filing date back to Oct. 15. It is important to note that it is not an extension of time to pay, just to file. While it's advisable to file your tax returns or extensions well before April 15, make sure you do so no later than this date to avoid any penalties.

If you're expecting a tax refund, consider saving that money rather than spending it. If your emergency funds fall short of the recommended 3-6 months of living expenses, add it to that account. If your emergency account is in good shape, consider investing your refund in an account that earns interest.

Also, don't forget about your IRA and HSA contributions. You have until April 15, 2024 to contribute to your IRA and HSA for 2023.

April: Review debt

Dealing with debt can be a significant burden. If you’re expecting a tax refund, consider using it to pay down high-interest debts, such as credit card balances. This approach not only reduces your financial liabilities but can also alleviate stress and potentially improve your credit score.

This is also a great time to review your credit score if you haven't already. Many credit card companies offer this service for free, but you can also obtain a free report annually from each of the major credit bureaus. It's important to stay on top of your credit to ensure there are no errors on your report. It also helps you identify opportunities to improve your financial standing.

May: Focus on education 

As the school year winds down and thoughts turn to summer, it’s the perfect time to consider educational savings for your children or grandchildren. 529 plans are now more versatile than ever, offering tax-free growth for various educational expenses, from traditional schooling to vocational training. A 529 plan is a great way to grow money tax-free while investing in the education of future generations.

June: Do mid-year check in

June marks the halfway point of the year, making it a great time to gauge how closely you’ve followed your financial goals. Have you stayed the course? Or have you fallen off track? Take this opportunity to revisit the budget and goals you wrote down at the beginning of the year and adjust accordingly if your priorities have changed.

July: Set up for financial freedom

The month we celebrate our nation’s independence is a great time to set yourself up for your own financial independence. Check in on your investment portfolio and asset allocation. If you're working with a financial adviser, ask questions to ensure that your holdings are well-diversified and there's no unnecessary overlap.

Summer can be lots of fun, but it can also be expensive. Make sure to practice mindful spending so that your summer fun doesn't derail your larger financial goals.

August: Update insurance

With the arrival of August and the back-to-school season, our lives often shift back into more structured routines. That makes it an ideal time to bring the same level of organization to your financial matters, particularly insurance. Take the opportunity to review and update your various insurance policies. Make sure your life, disability, home, and auto insurance are current and meet your family's evolving needs. If you haven’t taken advantage of any discount programs, like good student driver discounts, now's the time.

September: Consider charities

As the year begins to wind down this September, it's a good time to reflect on your charitable contributions. Consider how much you've donated to charitable causes so far and what more you'd like to do before the year ends. This way, as the season of giving approaches, you can allocate your resources effectively to ensure you can fulfill your charitable goals for the year.

October: Update online security

There’s nothing spookier than cybersecurity fraud. As you begin to think about the end of the year, it’s wise to reevaluate online accounts and passwords. Ensure that you use strong, unique passwords for each account that use a combination of uppercase and lowercase letters mixed with numbers and special characters. Regularly updating your passwords can significantly enhance your online security.

November: Think about family

November brings the holiday season and family gatherings both near and far. This focus on family makes it an ideal time to address important financial matters. Consider reviewing and updating your estate documents, such as wills and trusts. It's also a perfect opportunity to have age-appropriate financial conversations with your children and organize all your important financial documents in one accessible place. These steps help ensure your family's financial affairs are in order, providing peace of mind during the festive season.

December: Review and look ahead

As the year comes to a close, it's an ideal time for those who aren't yet retired to reflect on their retirement savings. Review what you've contributed to your tax-deferred retirement accounts this past year and what you can increase this to in 2025. Even if you can't do it immediately, aim to save 15% of your salary (including employer contributions) in your retirement accounts.

If you turned 73 in 2024, now is the time to make sure you've taken your Required Minimum Distribution from a traditional, rollover, SEP, or SIMPLE IRA. Also, check the provisions of any inherited IRAs, regardless of age. Forgetting to do so can be a costly mistake.

With your financial professional, consider tax loss harvesting in your portfolio to offset income taxes. This investing strategy attempts to lower your taxes for the current taxable year by choosing to sell an investment at a loss.

Stay financially attuned all year

Remember that consistent attention to your finances is key to achieving your goals. From setting clear objectives in January to making smart decisions about retirement in December, each step you take is a building block towards financial stability and freedom. Use this checklist as a guide throughout the year to stay on track, and remember that small, consistent efforts can lead to significant long-term benefits. Here’s to a financially healthy and prosperous 2024!

Hillary Stalker, CFP, is an executive vice president and financial adviser at CapWealth. For more information, visit capwealthgroup.com.

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