Year-Long Plan for Financial Freedom

Dec. 1, 2015 – Jack Sirard contributing writer

By Jack Sirard

Softball News Report

With the New Year rapidly approaching, you’ll likely see plenty of reports focusing on New Year’s resolutions and of course, putting your financial house in order will be at the top of the list.

But financial planning should not be viewed as a goal to achieve in January and let the chips fall where they may the rest of the year. It’s far too complicated to get done all at once and as a result, many people just let things slide.

That’s why I think you should try and solve one piece of the puzzle each month and over the course of the full year, you’ll no doubt get it done.

So let’s start out on our month-to-month guide to financial freedom:

JANUARY

The best way to get this all started is to develop your spending plan for the year, says financial adviser Dan Seidman. The Boston-based expert notes that it’s pretty easy to determine your annual source of income, but it’s a good idea to break it down as a monthly plan. 

He notes that the far trickier part is determining your monthly spending because there are so many bills like insurance, home repairs and taxes that you only pay once a year or every six months. The best was to get an accurate picture of your spending is to log in each day what you spend over a month or two.

FEBRUARY

It’s a short month so take on an easier task. We’d suggest meeting with your financial adviser. 

Review all your investments including your IRAs, 401(k)s and individual investments. You want to know what your net worth is. That’s done by simply adding up all your investments and subtracting your debts such as your mortgage or car and school loans. If it’s time to make a course adjustment, the sooner the better, says Seidman. You also need to make sure you are getting the most out of your 401(k) plan at work. If you got a raise last year, you should put some of that into your retirement plan.

MARCH

You’ve got a full 31 days so it’s time to clean up all your financial files including your piles of tax returns, receipts and warranties. With tax day, April 15, fast approaching, organizing your files will help a lot. The IRS advises that you keep your records “as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support items shown on your return until the period of limitations for that return runs out.” 

APRIL

Let’s make sure that we get all those taxes filed on time this year. No more making excuses and filing for an extension. If you find out that you once again owe money and it hurts, consider decreasing the number of dependents that you claim on your weekly paycheck, financial adviser Seidman say.

MAY

Rummage through your desk and find your will and/or living trust. Reread it with your spouse to see if any changes are warranted. Was there a birth, death or divorce in the family that may affect things? If you haven’t talked to your attorney since he or she helped you craft these documents, now may be a good time to check in.

JUNE

Review all of your insurance coverage and for most folks that includes homeowners or renters, auto and health insurance. “If you are turning 50 this year, consider getting long-term care insurance. Getting insurance while you are healthy helps keep the premiums low,” Seidman advises. At any rate, give your insurance agent a call to go over all of your policies.

JULY

Talk to your children about your finances and let them know what you have planned for the rest of your life. Sure things change, but you should be able to talk over what you have laid out in your will or living trust. Make sure those who will be taking care of things after you’re gone know what they have to do and where all your documents are.

AUGUST

Talk to your parents about their finances and their will or trust. This no doubt will be harder to do as they may think you’re just trying to figure out what your inheritance will be. But you need to know where they keep their legal papers, where the key is to their safe deposit box and where they have their financial accounts. 

It might be time for them to put your name on their bank accounts so you can help handle their finances in the future.

SEPTEMBER

You’ve been talking about it for months or maybe even years so it’s time to set up that college fund for your grandchildren. It’s a pretty simple task and once you’ve established the account, you can easily add to it on the child’s birthday or Christmas instead of buying them a half-dozen toys that they’ll soon discard.

OCTOBER

Since you’ve already organized your desk, you no doubt found your safe deposit box key. So head on down to your bank and go through each item in the box. You might want to make copies of some things to keep at home and you’ll surely want to write down a log of what’s there to be kept at home. It’s also a good time to take in the pink slip to that car that you paid off three years ago.

NOVEMBER

It’s time to be thankful so before the holiday rush hits you, look over your charitable contributions and donations that you’ve made in the past year. Do you want to add a new group or charity to your list? You might even want to check out how your selected charities rate by looking online. 

DECEMBER

There’s so much to do during the holiday season and so little time, so your assignment for this month is to review the previous 11 months and go back and finish up any task that you came up short on. 

If you did it all, then relax and enjoy the holidays.

Jack Sirard is a national financial writer and senior editor/writer for Softball News