Now that the partying is over, and reality has set in, it’s time to get down to business.
With the advent of a new year comes an opportunity to set some new goals in all areas of your life, including financially. With that thought in mind, here are six steps to take to start off 2017 on the right financial footing, in no particular order:
1 – Review your estate plan, including beneficiary designations. 2016 may go down as the year of celebrity deaths. No one likes to think about dying, but there is perhaps nothing more important you can do on a regular basis than review your estate plan. Laws change, and your wishes change as well. Make sure your will, trust, powers of attorney, and advance directives reflect current law and your current desires for your legacy. That includes checking beneficiary designations for insurance policies and retirement accounts. Don’t leave behind a mess for your heirs the way Prince did.
2 – Start organizing your taxes – for 2017. You may just be getting started organizing your records for your 2016 taxes. That doesn’t mean you should ignore 2017. Get a file together for all your ’17 tax documents. Start tracking your deductible mileage. Open a health savings account and start making contributions if you have a high-deductible health plan. When you meet with your tax preparer for 2016, discuss other tax-saving moves you can start now for 2017.
3 – Make charitable gifts now (don’t wait until December). Non profit organizations need support all year long. Don’t wait until the last month of the year to demonstrate your generosity. Give early, give often. And keep your gift receipts in the ’17 tax file you put together earlier.
4 – Adjust retirement plan contributions. Are you contributing to your company retirement plan to the maximum allowed? If not – at a minimum, are you contributing enough to secure your company match? Did you get a year-end raise? These are all reasons to consider increasing your retirement plan contributions for 2017. Note for business owners: review your current retirement plan with your financial and tax advisors and make adjustments as needed.
5 – Budget for those large expenditures. Make a list of the major purchases you anticipate making this year, and how much you need to spend on each. Set aside enough money for each one so that you can cover these purchases with current cash flow as much as needed. To the extent you will be financing, shop around for the best financing deals. With today’s still-low interest rates, borrowing can be a good option.
6 – Review your asset allocation. Do you have the right mix of stocks and bonds to weather any market? And is that allocation consistent with both your long-term goals and your tolerance for risk? Speak with your financial advisor about your allocation and make sure you understand what you have and why. That goes the same for the allocation in company retirement plans.
Allow me to add a #7 to this list – always plan for the unexpected. It’s going to happen.
And have a Happy and prosperous New Year.
Questions or comments? Contact me on Twitter @juanros or LinkedIn.