The 2021 Financial Monthly To-Do List
The 2021 Financial Monthly To-Do List
On the 42nd episode of the Retirement Explained show, I’m talking about what you should be doing/thinking each month about your finances.
During each month throughout the year, there are things we can do to make sure we’re being as prudent as possible with our investments and in today’s episode I give you all of the financial planning items you should be thinking about throughout the year.
January
During the month of January, I’d be looking ahead at where I want to be 12 months from now and where I am today. To accomplish any goal, you must know three things: Where am I today? Where do I want to be? And how do I get there? So as we face down the coming year, it’s a good time to chart a course on where we want to be at the end of this year we’re starting.
February
In the month of February, I’d be thinking about doing a review of my investments to make sure that I’m going to be able to sail effectively through the course I’ve charted in January.
Also, it’s not a bad time to do a review of your estate plan and it’s a good month to check in with your tax professional and begin collecting the tax documents that you’re going to need to do your taxes…you should have received the bulk of the 1099s, W2s, and other important documents that you need to complete your taxes and getting them together early before you do your taxes will help a lot.
March
March is a month where I want you to make any contributions to IRAs and HSA accounts for the previous year. You have until the tax deadline (typically April 15th) to do this and it’s a good idea to take care of this so you’re not dealing with it at the last minute!
April
April is the month when taxes are due, so I’d be focused on that of course!
May
The month of May is a great month to discuss with young family members the importance of financial planning and investments. May is when most schools end their year and it’s a transitional period of time for young people so it’s a good time to talk with them about investing and try to coach them on the importance of financial health. There aren’t any classes in school about financial wellness (oddly enough) so it’s important that you fill in the gap.
Consider asking your financial advisor if they’ll meet with you and your loved one to provide some education for where they’re at.
Also it’s a good time for you to consider your emergency fund. Conventional wisdom says you should have between 3-12 months of your expenses in the bank in case of an emergency so that if you have an unplanned financial event, you’re not having to go into debt or pull from your retirement accounts to pay for it.
June
During the month of June, I’d be thinking about continuing to discuss finances with the younger generations and also creating or reviewing your investment policy statement.
An investment policy statement is a document that lays out the investment strategy and is like a plan/blueprint you can refer to where it lays out the strategy and what is trying to be accomplished with your investment plan.
It’s a little different than your retirement plan or retirement income plan; your retirement plan is a document that is like a roadmap to getting to retirement and your retirement income plan is like a roadmap for how you’re going to use your savings to create an income stream to live during your retirement years.
July
During the month of July, we’re halfway through the year so I’d be taking this time to take a look a my taxes and investment costs.
It’s important to look at your taxes before too deep into the year because you’re going to have an idea of where you’re trending from a tax perspective and you still have some time to make adjustments during the second half of the year.
For investment costs, if it doesn’t come up during your annual review with your financial advisor (and I wouldn’t fault them if it doesn’t, usually reviews are jam packed with discussion from both sides so it’s easy for that not to come up) I’d use July as a chance to ask them what you’re paying: be sure to ask about their fee and any expense ratios on the investments you’ve got.
August
In August, I’d take some time to review my beneficiaries. Those are the people you’ve designated as the receivers of your assets should something happen to you.
Take this time to check to make sure you have the right people in place.
September
In September, I’d be taking some time to review your long term care plan, if you have one. If you don’t then I’d look into it.
Long term care is something your financial advisor should be discussing with you and they should be running scenarios that show the impact of a long term care event for you or your spouse or both on your financial wellness.
You can plan to self-insure, that’s a viable option, but I’d be reviewing what the plan is going to be should you need some form of care during your later years.
October
Every October, the IRS announces new IRA contribution limits…so it makes sense to look at the new contribution limits and to do some budget planning for the coming year. You might be able to put an additional dollar amount in your IRA during the coming year and you can start to make adjustments to your budget ahead of time.
If you’re living in retirement and this doesn’t affect you, you can take a look at your RMDs (which are due 12/31 of every year) and make sure you’re conducting your annual review with your financial advisor so that you can coast into the holidays and relax.
November
In November, I’d be thinking about doing a review of my life insurance. You’re likely already thinking about your health insurance since it’s open enrollment at your workplace, so let’s think about your life and disability insurance needs while we’re at it.
Your financial advisor can help you find a policy, they’re likely licensed to do life insurance and if you’re doing it yourself, I’d check out policygenius.com.
December
December is time to relax and enjoy friends and family and the holidays. It’s a month of giving and it’s the deadline for you to get your charitable contributions in!
So make sure you take stuff to Goodwill and make contributions to the organization of your choice so we can get those deductions!
-Brian