Just as you get an annual physical to keep your health in tip-top shape, you should set aside time to go through your finances. This ensures that you are in charge of your money. The earlier in the month you start, the better, so it does not interfere with your holiday festivities. A task as simple as verifying your car and health insurance coverage and making or updating a personal or family budget can make 2019 go much smoother. Before you file your papers away and start to write on your brand new calendar, it is a good idea to go down this quick list and make sure your finances are up to speed.
1. Assess your progress toward your goals. Take a look at where you have been, where you are and where you want to be in the future. “Before the year ends take advantage of any gains or losses that should be recognized within the year,” said Milda Iliscupidez, a financial advisor with Edward Jones in Monterey. Having a power team including an attorney, certified public accountant and financial planner go through your portfolio can make things easier.
2. Contribute to an IRA. You cannot open a joint IRA with your spouse, but you can each open one and claim double the tax deduction. U.S. News & World Report said that those who are not provided with retirement benefits at work could contribute to an IRA regardless of how much they earn. They added that if you are eligible for a traditional pension plan or workplace retirement plan like a 401(k) you can additionally make a tax-deductible contribution to an IRA only if your income falls below specific cutoffs.
3. Contribute to a 529 education savings plan. “A lot of people have family that is far away or do not like to send gifts so contributing to an education savings plan is a wonderful way to show someone how much you care,” said Iliscupidez. It is never too early or too late to give a child’s brain a boost.
4. Review your insurance coverage. Every year your needs change such as if you have paid off your home or just bought one. Go down the checklist of property insurance, auto insurance, health insurance, life insurance, and long-term care insurance. Make sure you are familiar with policy numbers, premiums and customer service numbers.
5. Get your child to start saving. At the holidays make sure it is not just about giving money to your child so he can pick something out at the toy store. Instead, it should be about earning it and teaching a way to save. “Every time there is good behavior, or something deserving of praise put money in a piggy bank so your child understands that things are paid for, and you cannot just write a check or use a credit card,” said Iliscupidez. It helps if you set a goal such as an entertainment system or video game that your child wants and save up to be able to make the purchase.
6. Understand how required minimum distribution works. At the age of 70, if you have a retirement account, you are required by law to take out a certain amount every year. It increases every year, and if you do not take it out, it is taxable by almost 50 percent. It is the second highest tax penalty next to fraud.
7. Pick a charity. You can help homeless animals find forever homes or raise funds for medical research to eradicate a disease. You can also give household items that you no longer use anymore to an organization that distributes to people in need. Fidelity Investments stated that for non-cash charitable contributions over 250 dollars you would need a receipt that includes a description of the item and details.
8. Declutter. Know what to keep and what you can discard. AARP said that there are two general rules. First, anything tax-related should be saved for at least three years, and anything tax-related that reflects a loss should be saved for seven years. For insurance policies, AARP instructed to get rid of old versions when new versions arrive. This helps to avoid confusion. Keep monthly statements until you get year-end reconciliation. When you get rid of papers, shred them to prevent fraud.
9. Create an organization system. You can make this fun and use anything from file cabinets to decorative boxes. Once you master how your system works, you will need to maintain it. You may have a file for incoming bills for example. Put the due date on your calendar, and when you have taken care of it write paid on it.
10. Find a professional you can trust. Forbes named some pros of having a certified financial planner. They described the advantage as having expert management of your portfolio taking into account goals and cash needs and a partner to help you navigate complex financial situations, answer questions as they come up and provide continuous financial planning. They also said the planner could bring peace of mind because you know that a professional is monitoring the market and your portfolio and making needed changes. Of course, you can manage your own money, but some mistakes can be expensive. You may miss out on tax savings opportunities, make poor investment choices or pay hidden fees and not realize it.
Jamie Lober, author of Pink Power (www.getpinkpower.com), is dedicated to providing information on women’s and pediatric health topics. She can be reached at jamie@getpinkpower.com.