As we embark on a new year together, we want to ensure that your financial journey is on the right track. To help you achieve your financial goals, we’ve prepared a checklist that can serve as your roadmap for the upcoming year.
1. Reflect on Your Goals
Take a moment to review and reflect on your financial goals. Whether you’re saving for a home, planning for education, building your retirement fund, or simply want to travel, it’s crucial to have a clear understanding of your objectives.
2. Budget Review
Evaluate your budget from the past year and adjust as needed. Ensure that your spending aligns with your income and financial goals and identify areas where you can cut back or save more. Evaluate your surplus and how you can earmark these funds for short- to mid-term goals or long-term savings like retirement. Lastly, consider using a spending tool to track your expenses.
3. Emergency Fund Checkup
Confirm that your emergency fund is in good shape. We recommend having at least three to six months’ worth of living expenses set aside in case of unexpected events. If you find you are short, replenishing your emergency fund should be your first priority in the New Year.
4. Investment Portfolio Analysis
Review your portfolio composition. Assess if you own a range of assets classes, market capitalizations, geographies, and sectors. Having ample diversification across different investments can reduce risk. Also, make sure your investment strategy aligns with your goals. For example, if you anticipate a big withdrawal to buy a house over the next 12 months, these funds should be invested in very safe assets and not put at risk in the market. If your goals have changed, make sure to communicate this to your financial advisor or consider reallocating your portfolio.
5. Retirement Planning
If you haven’t done so already, start contributing to your retirement accounts (Roth IRA or IRA) and take advantage of employer-sponsored plans (e.g., 401(k), 403(b), PSP, etc.). Even small contributions now can compound over time into big savings down the road. If your employer provides a matching contribution, make sure you are contributing at least to this amount to receive the match and consider increasing your contributions gradually – like when you get a bonus or raise.
6. Debt Management
Evaluate your outstanding debts, along with their current interest rates, and create a plan to pay them down. Prioritize high-interest debts (like credit cards) and explore strategies to reduce your overall debt burden. Every dollar saved on interest is a dollar for your future you!
7. Insurance Coverage Review
Review your insurance policies, including life, health, disability and property/renters insurance. Ensure that your coverage meets your current needs and adjust if necessary.
8. Tax Planning
Start organizing your financial documents for tax season. Consider consulting with a tax professional to maximize your deductions and optimize your tax strategy. Review your withholding to ensure it’s appropriate and that you are not overpaying or underpaying the IRS. Are you taking advantage of ways – such as 401(k), HSA/FSA contributions, itemized deductions – to lower your taxable income? Do you have any positions with larger unrealized gains that could benefit from creating a harvesting strategy?
9. Estate Plan Review
Review your estate plan. Do you have estate planning documents in place? Has anything changed substantially in the past year? Make sure your accounts are titled correctly and beneficiaries are up to date.
10. Financial Education Opportunities
Invest in your financial knowledge by listening to podcasts, attending workshops or webinars, or reading informative articles or blogs. The more you learn, the more confident you’ll be managing your money. You can start by checking out the HTG News & Insights page to peruse a variety of topics on investing and financial planning. Feel free to respond to this email if you have a specific question.
11. Schedule Regular Financial Check-Ins
Set dates throughout the year to check in and see how you are doing with the items above. If you have a partner, schedule a ‘financial date night’ to review your financial goals together, and identify new goals for the upcoming year. And don’t hesitate to seek professional help! Consult your financial advisor for personalized advice tailored to your unique goals and situation.
Remember, this checklist is your launchpad, not a rigid schedule. Adjust it to fit your lifestyle and adjust your goals as things evolve in your life. The most important thing is to act and be consistent in your efforts.
We are committed to helping you achieve financial success in the new year and beyond.