New Year’s Financial Planning Checklist

New Year’s is the perfect time to reflect on years past while also looking ahead to the future. Between changing tax laws, a massive shift in the labor market, and good old fashion holiday fatigue, taking the first step can feel overwhelming. A New Year’s financial planning checklist can help keep you from overlooking important items while prioritizing what matters most to you.

Create a Financial Inventory

First, make a catalog of your assets – things like your compensation, what you have in savings and checking accounts, and investment accounts. Next, do the same for your liabilities. Include loans, credit cards, debt, and expenses like home and car payments, utilities, insurance, and other bills. In addition to the benefits of regularly assessing your financial comings and goings, this information will prove invaluable when making the rest of your planning decisions.

This is a good time to dig deeper on your debt and credit reports. Identify all the debt you may have such as student loan or credit card debt. Prioritize repayments, ideally those with high interest.  Each of the three major credit bureaus offer one free credit check every year, allowing you to review your credit report and make any necessary corrections.

Tax Prep

It’s never too early to start thinking about taxes. Make sure any financial institutions and employers have your correct address so any documents they send will be properly delivered. Begin gathering the documents you’ll need come tax season, such as prior returns, 1099s, bank statements, and more.

Review your tax withholdings. Many people underwent changes in their financial situation over the past year, so be sure you’re still withholding the correct amount for your situation. If you’re unsure how much you should withhold, the IRS has a tax withholding calculator to help.

Savings and Retirement

Chief among many people’s financial goals is retirement savings. With your financial inventory in hand, determine how much you’d like to contribute this year, and consider doing so as early as possible. Over time, earlier contributions are likely to lead to better overall returns. After all, a contribution made on January 1st has an extra year to appreciate compared to a contribution made on December 31st.

Review your investment portfolio. Have your plans, goals, or timeline changed over the past year? Are your investments properly diversified among different investment types and sectors? Has your need for income changed?

Fund an emergency account. Many people dipped into emergency savings over the past few years. If yours has been drawn down, consider replenishing your reserves. Many experts recommend having emergency savings equal to 3-6 months of living expenses.

The information provided is for informational purposes only.  It is not intended to be used, and should not be used, as the sole basis for legal and/or tax advice.  Individuals should seek and rely upon the guidance and advice of their own legal and tax counsel before making any decisions regarding any planning, investment, tax concepts or strategies discussed herein.  Individual circumstances may vary and results discussed are no guarantees of applicability or future performance.

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