Cleaning up personal finances remains one of the top
resolutions every New Year. But we all know what
happens to most such self-promises, so here’s a
month-by-month to-do list to cultivate better financial
January: Organize paperwork. This obvious starting
point eludes many. Are your financial documents
organized, in paper or virtually, so information is at
your fingertips? Your heirs will be eternally thankful if
you unexpectedly die or are incapacitated.
February: Consolidate investments. Trim your
number of accounts and consolidate all your dormant
401(k)s into individual retirement accounts. Spreading
your assets across various brokerage accounts is not
smart diversification – it’s a recipe for confusion.
March: Follow the money. If you’re still working and
too busy with your life, you may have a poor sense of
your personal cash flow, the money that comes in and
where you spend it. You can’t establish how much
you save or spend without knowing where you are
April: Tax smarts. It’s better to owe your state and
the federal government instead of overpaying
throughout the year.
Did you fund an IRA for your spouse, max out funding
on your defined contribution plan at work or fund your
Roth IRA by the April 15 deadline? Did you track
your losses on your taxable accounts, such as
individual and joint investment accounts, bank
accounts and money market mutual funds, to name a
few? These moves can qualify you for tax credits.
May: Investment smarts. How much do your
investments cost you? Do you know what your
insurance agent, 401(k) plan or financial advisor
charges? How about the underlying expenses you
pay to buy mutual funds or exchange-traded funds?
Are your investments allocated wisely to minimize
taxes? For example, do you hold real estate
investment trusts in your tax-deferred account?
Municipal bonds in your taxable account? How much
risk do you take?
June: What are you worth and why it matters. You
can calculate your net worth (all your assets, such as
your home and retirement funds, minus all your
liabilities, such as your mortgage and credit card debt)
many ways. A sophisticated net-worth calculation
projects factors of asset growth such as rates of
investments’ returns and risk, and your rate of saving
and liabilities to the end of your life.
Your goal: Minimize the risk of outliving your assets.
July: Insure against risk. Insurance keeps you
financially whole if disaster strikes. To cite two
examples of policies to review, did you outlive your
20-year term life insurance? If so, you’re a winner
because you remain alive yet you need to consider
Have you considered long-term care insurance,
especially if you’re a woman with a longer life
expectancy than a man? This coverage helps with
costs of basic daily needs over an extended time.
August: Retirement planning. This planning starts in
your 20s and does not end when you retire. If you’re
employed, know when you can afford to retire
(assuming you’re not laid off).
Are you aware of all strategies to maximize Social
Security payouts? If retired, are you withdrawing from
your accounts in the correct order? (Start with your
taxable holdings, then move on to tax-deferred and
then untaxed.) Calculating optimal distributions from
IRAs and other taxable income sources annually can
trim your taxes.
September: Gift wisely. You can give back in many
ways to organizations and people you care about with
donations of appreciated securities or with payments
on college loans or new mortgages. The Internal
Revenue Service offers several guidelines on gifting.
Your greatest gift may be taking care of yourself so
you don’t eventually become a financial burden to
your adult children.
October: Preparing for the inevitable. Engage an
estate attorney. If you die without a will, your state of
residency distributes your assets with no input from
If your estate documents are older than about seven
years, refresh them. Everyone needs such estate
documents as wills, living wills, medical health-care
directives and powers of attorney to stipulate your
wishes if you become unable to decide matters
You especially need these papers if you or your
spouse, or both, are uncomfortable with financial
matters and your children are younger than legal age.
Also, draw up or re-examine these documents if:
You’re in a second marriage
You own property in or reside in more than
You’re concerned about privacy
You own a business or
Your family must consider special needs
November and December: Reality check. If you
followed these steps, you’re in the minority of
individuals with the tenacity to tackle financial
But you still should engage a professional advisor to
check your assumptions. Be realistic about what you
can accomplish on your own.
It’s important to get your finances right and keep them
right all year.
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Charles Schwab. “Most Americans Don’t Have a Financial Plan, and Many Think Their Wealth Doesn’t Deserve One.”
Available at: https://pressroom.aboutschwab.com/press-release/schwab-investor-services-news/most-americans-donthave-
financial-plan-and-many-think-t. Accessed: 6/5/19.
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