Everyone was probably relieved to turn the page on 2022.
We had a year in which almost all asset classes lost ground. Inflation soared and the war in Ukraine showed very few signs of resolution. That said, you can only control what you can control. By staying disciplined and sticking to a well-constructed financial plan, you should be able to handle whatever life throws at you. It helps to get all the different parts of your financial life in order – budgeting, investments, asset protection, tax planning, retirement, estate planning, charitable giving, etc. – by breaking them down into monthly tasks. Here is a calendar to help you manage the next three months.
January: Financial Wellness Month
The US Consumer Financial Protection Bureau defines financial well-being as “a condition in which a person can fully meet current and continuing financial obligations, can feel secure about their financial future, and is able to make choices that allow him to enjoy life.
There are short-term and longer-term aspects to well-being. In the short term, it’s a good idea to include specific and achievable financial goals in your New Year’s resolutions. These can include increasing your financial knowledge, paying those holiday bills, tracking and reducing your expenses and create or strengthen an emergency fund.
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Newly expanded contribution limits for qualified retirement plans allow you to save more in your IRA, 401(k) or 403(b) plan. You must contribute at least enough to qualify for an employer matching contribution if your plan offers it.
To improve your long-term financial health, you need to create a net worth statement – essentially, a sheet of paper that takes down all the assets you own (for example, your home, stocks, bonds, cash, personal property) and subtract everything you owe (for example, outstanding mortgages, lines of credit, car or university loans, etc.). Household net worth is a very useful financial planning tool.
Also enjoy a free annual service to check your credit report or score (visit AnnualCreditReport.com or call 1-877-322-8228 to request your report).
Toward the end of the month, prepare for tax season by creating a physical or digital folder to hold all the items you’ll need to file your federal and state income tax returns: your W-2s, 1099s, financial statements (bank and brokerage accounts), etc. Getting organized now will save you time and plenty of headaches come Tax Day, which falls on April 18 in Minnesota this year.
Finally, especially after the volatile market we experienced last year, be sure to review your investment portfolio to make sure it hasn’t strayed too far from your target asset allocation.
February: Plan the Valentine’s Day they will always remember
Circle Valentine’s Day as a reminder to make sure your loved ones are financially protected should the unexpected happen.
to ensure it is up to date. Starting this year, individuals can transfer up to $12.92 million to heirs, during their lifetime or upon their death, without triggering a federal estate tax bill, up from $12.06 million l last year. (Married spouses can each make the same donation for life.)
Thanks to inflation and the IRS, the annual tax-free donation limit is also higher in 2023, rising from $16,000 to $17,000. The rules get complicated, so be sure to check with a tax professional or financial advisor before taking big steps.
Be sure to check the beneficiary designations on your life insurance policies and IRAs to make sure your assets will go where you intend them to go. Beneficiary designations replace the instructions in your will. We know of many situations where divorced couples have changed their wills but forgot to change their beneficiary designations! The money went to the exes.
March 12 is when we switch to daylight saving time, and it’s time to focus on asset protection. Fire safety experts recommend using this day every year to replace the batteries in your smoke detectors. Also be sure to test your carbon monoxide detector. While you’re at it, take a minute to review your auto and home insurance policies to make sure you’re not overprotected or underprotected.
Monday, March 20 is the first day of spring, and many people we know
around this time. Whether you’ve already filed your taxes or are sorting through your shoebox of receipts, you’ll see why reducing the paper clutter and signing up for online bill payment and digital statements can cut a lot of stress during tax season.
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Scan all important financial and tax documents covering the last seven years and store the files on a secure hard drive. This includes confirmations that contain the purchase date and cost base of any investment held in a taxable account. (You will need to know this information if and when you decide to sell for the purposes of calculating your short-term or long-term capital gains.)
Another useful tip is to give your scanned documents a title so they can be found on your computer. Try grouping documents by year and then into subfolders that categorize each file by purpose and priority level. Buy a shredder or hire a service to shred tax returns and bank statements that are more than seven years old or no longer needed. If you prefer or need to store paper documents, make sure they are in a safe place but easy to access for you or others you designate.
If you have investment accounts with different custodians, consider moving your investment dollars into a single account that you can monitor more closely. Close bank accounts and credit cards you no longer need to keep your finances organized and easy to maneuver.
This will make your life easier now, but also that of your executors or personal representatives whom you will appoint to manage your affairs after you leave (While we are on this dark topic, make sure your executor or family members know where you store your login passwords for all financial accounts.)
Taking these steps today and working with a qualified financial advisor can help position you for financial success in the future. We wish you and your family a healthy, happy and prosperous New Year.
The opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations to any individual.