Getting Your Fiscal House in Order in 2014
By now, most of you diehard “resolutionists” have committed your 2014 goals to paper. You are full of confidence or at least a hopeful expectation that this year will be the year you really get your life in order. You’ve vowed not to repeat past mistakes and are ready to take the bull, the new year, by the horns.
Before the year gets away from you, as they always seem to do, and you find some of your goals falling by the wayside, again, as they always seem to do, you may want to make sure you get your fiscal house in order first. After all, most people’s resolutions consistently revolve around two things: health and money.
Even the federal government has a New Year’s Resolutions site with links of references to help you stay on track. Not too surprisingly, three of the 13 most popular resolutions are money focused – getting a job, saving money and managing debt.
So before you get caught up in life and your best New Year’s intentions fade away with the glitter of the holiday season, consider the following financial checklist for the new year.
Meet with a financial advisor. If you haven’t had a discussion with a financial advisor in some time, or ever, now is the time to do so. It’s never too early or too late to begin planning for your future/retirement. If you already have a financial advisor it is a good idea to meet with him or her at least once a year to monitor your progress and evaluate your plan.
Look at your taxes. If you are one of the many April 15 procrastinators this could be the year to change that. While you are waiting on your W-2s, 1099s, etc., you can begin getting your receipts in order and/or schedule an appointment with your tax preparer. Why not take the stress off tax season this year and get your taxes done early, especially if you are getting a refund. Please note that the earliest day the IRS will be processing 2013 individual tax returns this year is Jan. 31. This date is slightly later than usual due to the government shutdown last fall.
Develop or review your budget. If you haven’t created a budget, create one, or if you haven’t looked at your budget in some time, it’s time to update it. Things change (having a baby, elimination of a debt, an increase in household utilities, etc.) and consequently this affects your budget. This is also great time to re-evaluate your expenses. Cancel subscriptions or services you never use and contact companies that your do business with regularly (e.g. your cable company) to see if they can offer you a better rate. Increase deductibles on your automobile, home or medical insurance, if possible, to lower your monthly premiums.
Update your will. Like your budget, any changes, good or bad (e.g. divorce), can affect your will. If you don’t have a will, now is a good time to draft one.
Check your credit report. With identity theft on the rise, it’s very wise to monitor your credit. At annualcreditreport.com, you can get a free credit report from each of the three credit reporting agencies once a year.
Evaluate your retirement situation (ties in with ‘Meet with a financial advisor’). If you haven’t begun putting away money for retirement, there is no time better than now to start. Most financial experts will tell you to set aside 10 to 15 percent of your annual income each year for retirement. However, if you can’t manage that, put away as much as you can. Remember, saving something is better than nothing.
If you are on target with your yearly retirement contributions, it’s a great time to review your retirement accounts and strategies. If possible, according to financial experts, savers should increase their retirement contributions by 1 percent each year. You should continue this increase every year as long as you can until you are saving the maximum allowed by the IRS.
As is the case when making any major changes in your life, Rome was not built in a day. However, if you will commit to at least one of these recommendations, your 2014 finances are sure to see an improvement over 2013.