Top 5 Financial To-Dos in January

As you reflect on the year you’ve had personally, professionally, and financially in 2014, are you any closer to reaching your goals?

Updating his blog pageWhether or not you view 2014 as a success, the year-end presents an opportunity to reflect and start anew with a clean slate for the year ahead.  If you’re wondering what steps you can take to get ahead in the New Year, here are 5 simple financial to-dos that won’t leave you feeling like you’ve bitten off more than you can chew.

  1. Review your net worth and check in on your goals

The number one way to start 2015 off on solid footing is to know where you stand financially. Reflect on the past year and assess your current financial situation compared to where you’d hoped you would be at the end of 2014.

And what’s the best way to do that? Create a balance sheet, otherwise known as your net worth statement. This statement is a snapshot in time of all your current assets versus your liabilities/debt. If you have a handle on your finances and know where everything lives, this should be a quick activity that gives you a one-page summary of your financial life.

How did you do against the savings goals you set for yourself last year? Comparing your net worth statements year over year is a great way to check in on your goals. Didn’t set any goals last year? No problem, 2015 is a great place to start. Simply choose one or two top financial priorities that can be accomplished within a year, write them down on paper and share them with others. Those who write their goals down and have someone to hold them accountable are far more likely to succeed.

  1. Review Your Expected Income and Withholdings

Life changes constantly. It’s likely your life doesn’t look quite the same as it did this time last year. Because families change, income circumstances change and tax laws change, it’s important to review your expected income for the upcoming year and the number of allowances claimed on your W-2 which drives the amount withheld from your paycheck.

If you consistently receive a refund in excess of $1,000, you are giving Uncle Sam free use of too much of your money during the year. On the other hand, your income may have increased substantially due to a promotion, a raise, or a job change.  If you are making far more than you were in 2014, it may be necessary to decrease your allowances in order to ensure you’re withholding enough so that you don’t get hit with a surprisingly high tax bill in April.

Work with a tax professional to determine the appropriate withholding amount for your situation.

  1. Tie up loose tax ends from 2014

Feeling like you could have been more proactive this year to wrap up your 2014 taxes? Lucky for you, there may still be time. In the first quarter of 2015, you still have time to make decisions that can positively affect your income tax situation for 2014. Below is a list of items that may help to reduce your tax liability for 2014. Work with a tax professional to determine which ones are applicable and/or appropriate for your situation:

  • If you need to submit an estimated payment for 4th quarter 2014, these are due by January 15th.
  • Contributions to a Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, or other qualified plan for the 2014 tax year can be made up until the tax deadline for 2015 (April 15th). *
  • Contributions to an HSA for the 2014 tax year can be made up until April 15th. *
  • Roth re-characterizations must be done by April 15th. *
  • Removal of excess contributions to IRAs must be done by April 15th. *

*If you file your tax return prior to April 15th, any contributions, re-characterizations, or removal of excess contributions must be complete prior to filing your return.

  1. Review Your Estate Plan and Beneficiary Designations

With a new year and a fresh start, take an hour to pull out your estate documents and read through them. Also pull your beneficiary designations on any retirement accounts and life insurance policies. As you do, consider the following:

  • What dates were these documents completed and last reviewed?
  • Has anything changed in your personal or family circumstance since this date (have you moved to another state, acquired a new large asset like a new home or inheritance, have you had a child, lost a loved one, gotten divorced, child reached aged 18, etc.)?
  • If you became incapacitated, are you still pleased with the person(s) you’ve chosen to handle your financial decisions? What about your health care decisions?
  • If you were to pass away, do these documents still accomplish your wishes the way you intended when they were originally written?
  • Are your loved ones aware of your estate plans and their appointed roles and responsibilities as assigned in your documents?
  • Are the beneficiary(ies) listed on your retirement plans and life insurance policies up-to-date and still appropriate? Have you designated secondary beneficiary(ies)?

As you consider these questions, jot down your thoughts on paper. Work with your financial advisor to update your beneficiaries if necessary and schedule an appointment with your estate attorney to make any necessary changes or updates to your estate documents. You’ll sleep better at night knowing you’ve reviewed these for the benefit of your family’s well-being.

  1. Put a plan in place

Each area of your finances affects another, and making decisions in isolation can sometimes be more harmful than good. If you’re interested in working with a professional to lay out a financial roadmap for your future, look for a Certified Financial Planner™ Professional and NAPFA Registered Financial Advisor who can partner with you to create a comprehensive financial plan. You’ll find that it is well worth the time, energy and resources to have the peace of mind knowing that you are on the right path to financial freedom.

If the cost of quality advice has stopped you from searching for a financial advisor, you might be surprised to find that you have options you didn’t know existed. Clearview Wealth Management has structured our fees in such a way that allows younger professionals or those with lower asset levels to work with an experienced advisor who can be their accountability partner along the path to financial independence.

Conduct your research to find a financial advisor that suits your needs, cares about your well-being, and will always act as your fiduciary. Contact one of Clearview’s CERTIFIED FINANCIAL PLANNER™ Practitioners and NAPFA Registered Financial Advisors to discuss how we can help you design a plan that fits your life.

After all, “if you fail to plan, you plan to fail”. Let’s plan to make 2015 your best year yet.