Financial To-Do List, Part 2: July through December

 

 

Originally published in North Bay Business Journal

Happy second half of 2021! It is time to revisit your financial to-do list with monthly goals to take you through the end of the year. Just like our guide for January through June, I suggest adding a few simple objectives to your calendar each month to make sure you stay on the path to reaching your financial goals.

Even better, make these calendar to-dos annually recurring, so you will be reminded each year! It may seem daunting to build a plan for your financial future, but even just one or two simple actions each month will help keep you on track.

July – Review or create your estate plan

Discussing and thinking about what will happen after you are gone can be difficult, but creating a plan now for who will inherit your assets, make critical medical decisions on your behalf, or care for minors in worst-case scenarios can save a lot of time and money, not to mention headache and heartache. Review beneficiary designations on your IRAs and 401(k)s to make sure that they remain consistent with what you want. Speak with an estate planner to ensure loved ones are cared for how you intend.

Put together account directories, complete with where your bank accounts, retirement accounts, and safe deposit boxes are held, with account numbers, individuals you work with, and online login information. Include any other essential information pertaining to your net worth, including real estate and business holdings. Keep this information in a secure place, along with any wills or trust documents, or provide them to your financial advisor for safekeeping.

August – Cash and emergency fund review

If you are retired, you will want to make sure you have enough liquid cash or low-volatility assets to meet your near-term expenses. When we do experience another market decline, you do not want to be forced to sell stocks to meet those cash needs, potentially locking in losses. If you are still working, make sure that your emergency fund is intact and healthy enough to cover three to six months of expenses. This last year has put a strain on many of our income streams and highlighted the importance of having cash on hand.

September – Check in on your financial plan

Are you hitting the savings and spending targets you set at the beginning of the year? If not, maybe it is time to revise your goals or start increasing your savings. Consider setting up automatic transfers or changing direct deposit instructions to help you meet savings goals. If you have not set any savings or spending goals yet, now is the time! If you need to, start small! Consistently saving even a small amount each month will get you moving in the right direction.

October – Review cybersecurity

We continue to see data breaches of major firms, and you should update passwords regularly and add two-factor authentication when possible. Always be wary of fraudulent calls and emails from unverified sources. If you receive a call from your bank or any source asking you for information, you can always hang up and call them back to verify who they are.

November – Review your insurance

As we get closer to the end of the year, most employers offer open enrollment periods for health insurance. It is a good idea to review your current elections and property insurance, life insurance, or any other policies that you have. As life events occur, be aware of which policies may no longer be appropriate and evaluate your coverage to avoid being underinsured.

December – Give generously

If you plan to give to loved ones in 2021, each individual can gift up to $15,000 per person without filing a gift-tax return. If you gift over that amount in 2021, you will be required to file the return but will more than likely not be subject to paying any gift taxes unless you end up exceeding the $11.58 million lifetime exemption.

Speak with your tax professional about lowering your tax bill by making charitable donations if you plan to itemize. If you are taking Required Minimum Distributions (RMDs) from IRAs, you have the option to donate directly to a charity through a Qualified Charitable Distribution (QCD) to reduce your taxable income for the year.

And that’s it, congratulations! By tackling a few things each month, you can keep your goals in sight and ensure that you are creating the financial future you want for yourself and your family.

Having goals is important, but in the words of French writer and thinker Antoine de Saint-Exupéry, “a goal without a plan is just a wish.” No one can wish their way to reaching financial goals, but even the simplest plan, consistently applied, can make a big difference.