A few hours a month can help you end 2022 more financially organized
Do you want to get your finances in order, but you’re not sure where to start? With just a couple hours each month throughout 2022, you could end the year with a more organized financial life.
Consider the following calendar of to-dos, offered by Leslie Talbot, Thrivent senior product marketing specialist; Paul Aslakson, Thrivent financial consultant in Fargo, North Dakota; and Mike Truesdell, Thrivent financial consultant in Story City, Iowa.
January: Set goals and review spending
The new year is a great opportunity to set financial goals, Aslakson says. He encourages clear goals with actionable steps for the short-term (next five years), mid-term (six-10 years) and the long-term (11+ years).
“Actually, write down what you want to accomplish in those time frames,” Aslakson says. “Unfortunately, a lot of people procrastinate with doing a written strategy altogether.”
It’s also a good time to look at your spending plan. Download a cash flow worksheet and track your spending for a month or two.
“If someone looked at your checkbook or your bank and credit card statements,” Truesdell says, “what would it say about you? It’s important to minimize expenditures that aren’t in line with your goals.”
Your January checklist:
- Set/clarify financial goals.
- Review spending plan.
February: Protect those you love
You insure your car and your home, but what about your most important assets—yourself and your income? An insurance check-up with your financial advisor helps you look at the amount of insurance you’d have to protect your loved ones if you died.
There are three elements, Talbot says, to an insurance check-up:
- Right amount: Covers your needs.
- Right type: Provides it when you need it.
- Right people: Reviews who is insured and that your beneficiaries are up-to-date.
An online calculator, such as Thrivent’s life insurance calculator (thrivent.com/lifecalculator) can help you determine how much you need, Truesdell says. Or search human life value calculator to find one on your own.
Having enough insurance really is all about love. “It isn’t to make your family rich, but it is to enrich your family’s life,” he says.
Your February checklist:
- Complete insurance check-up.
March: Spring clean your finances
As you’re getting your physical house in order, it’s also a good time to get your financial house in order. You can start by reviewing your debt and creating a strategy for paying it down, such as tackling the high interest rates first, says Aslakson.
Consolidate debt where you can, and also review your credit score.
“Also make sure you’re reviewing your credit card statements each month,” Truesdell says. “Check for double charges or an interest rate increase.”
Truesdell suggests doing an annual net worth statement. Track your assets—your investments, savings and checking accounts, things you own. And track your liabilities—loans, mortgages, anything you owe.
“This will help you see your accomplishments year over year or where you may need to change,” he says.
Your March checklist:
- Create debt strategy.
- Review credit score.
- Review credit card interest rates.
April: Talk taxes
A tax efficiency check-up is an important conversation to have with your financial advisor, Aslakson says. “Begin with the end in mind, fast-forwarding out to determine what control and flexibility you want.”
The goal is to help ensure you’re proactively managing financial decisions now that could impact future taxation, looking at the three buckets of tax now, tax later and tax never.
“Income tax diversification is important to support optimal spendable income,” Talbot says.
“It’s about asset allocation and asset location.”
Review your W-4 withholding and adjust as needed. Consult your tax professional for guidance.
And, if you have a student attending college, don’t forget to submit (or update) your Free Application for Federal Student Aid (FAFSA). The federal deadline is June 30th, but you can apply as early as Oct. 1 of the year before in order to receive the highest amount of aid available to you.
Your April checklist:
- Complete tax efficiency check-up.
- Review W-4 withholding.
- Complete FAFSA.
May: Prepare for life’s emergencies and opportunities
Do you have a cash reserve—an emergency savings fund—that can cover the cost when a major appliance breaks or the car needs new tires? Or if you lose your job or are injured and can’t work?
“I’d recommend a three- to six-month cash reserve in a savings account to help protect you in case of a job loss or emergency,” says Truesdell. “It’s also important to have an extra opportunity fund, a place to save money for your wishes and goals.”
Be sure to replenish cash reserves after used as a cash shortage during an emergency may end up on high interest credit cards.
Your May checklist:
- Determine desired cash reserves.
- Set up cash reserves account and automate contributions (short-term savings).
June: Get vacation ready
Summer often is a time for getting some fun in the sun, whether that’s at home, day trips by car or more. Just like you’d meet with your financial advisor for an insurance check-up, you should do the same with the provider(s) of your home and car insurance.
Review your coverage amounts and deductibles to make sure you have adequate coverage for where you live, Talbot says. Look for efficiencies with your deductible as well as pooling your auto and homeowner’s coverage to optimize discounts. Use the money saved as part of your vacation fund or add it to your current savings plan for a mid-year summer boost.
Your June checklist:
- Review homeowners and auto insurance coverage.
July: Become financially independent
Review your retirement accumulation and distribution strategies. Aslakson offers some questions to consider: “Are you saving enough to receive the full match from your employer? If you are, is there even an additional percent or two that you can save? Do you have access to a Roth 401(k)? Have you considered a Roth IRA?
“I know when you’re in your 30s and 40s, it feels a long time away, but even small contributions now may make a big difference,” he says.
Truesdell encourages you to think about what you can control, how much you can save and how long you can save it.
“You can’t control market downturns, but you can control rebalancing, reallocation of your portfolio and increasing your contribution levels,” he says.
Your July checklist:
- Complete retirement check-up.
- Increase retirement savings contribution levels.
August: Plan for future education
With educational costs continuing to rise, it’s never too soon to look at options for education savings.
Custodial accounts with Thrivent Mutual Funds1, a Coverdell Education Savings Account or a 529 Educational Savings Plan2 are some ways to establish those saving accounts, says Aslakson. “It’s important to look at what you’re trying to accomplish and look at the pros and cons of each to determine which is the best fit for your family,” he says.
You also can consider a Roth IRA, which would enable you to save for retirement and college, he says.
Also, explore scholarships, employer reimbursement programs, work-study and other solutions that might reduce payments toward an education.
Your August checklist:
- Start college savings account.
- Explore other college funding sources.
September: Learn more about finances
Consider boosting your financial confidence by taking a class, participating in a webinar, or reading up on topics of interest and then talking to your financial advisor about how it applies to your finances.
“Learning more about finances, investments and 401(k)s and how they work helps you make decisions around your finances more easily,” Truesdell says. “It’s true that things change, but if you have the knowledge, you can react to the change.”
Also, Aslakson says, consider looking into educational opportunities offered through your Thrivent Member Network (thrivent.com/tmn), signing up for financial newsletters, and getting insights and guidance at thrivent.com/posts.
And the best part—there are no tests.
Your September checklist:
- Sign up for financial literacy webinar or visit a trusted financial blog site.
- Request to be added to regular newsletters.
- Meet with your financial advisor.
October: Get enrolled or re-enroll
It’s the start of open enrollment season for many employers and a good time to consider what’s changed in your life, compare plans and run calculations to optimize your employee benefits.
Review your life and disability insurance options. “If you were to become disabled today, do you know the exact number that would show up in your checking account each payday or month from your employer-sponsored plan,” Aslakson asks. “Is it enough?”
Maybe you no longer need family coverage, Truesdell says. “You can direct the money you save where you may be able to use it better.”
Your October checklist:
- Sign up for health coverage through your employer.
- Review benefits and select options that align with current finances and family needs.
November: Update your will and other documents
People often get intimidated when they hear the term “estate planning,” says Truesdell. “But everyone should do estate planning; it all starts with having a will.”
Wills and trusts help ensure your dollars are going to the people and places that are most important to you. Your attorney, who should be part of your financial team, can help you put your will, trust, power of attorney and medical directive in place, he says.
Also, make sure beneficiaries are up-to-date and everything is titled correctly.
Then, it’s time for a family conversation, Aslakson says. “If you don’t talk, it can leave a mess as people try to figure out what their loved one wanted to happen with their assets. Share your intentions with your family.”
Your November checklist:
- Schedule an appointment to update wills and trusts.
- Share extended care wishes with family members.
December: Be generous
Giving likely is a part of your life throughout the year, but it’s important to make sure you’ve accomplished your giving goals before the year is up. Review your charitable giving and tithing, and consider additional amounts, if you’re able, before the tax year-end, Talbot says.
“However, giving doesn’t always have to be financial; it can be time, talents and all that good stuff, too,” Truesdell says. “Create a unified effort with your family and make a difference for those places you’re passionate about.”
Your December checklist:
- Decide as a family where you would like to volunteer your time and talents.
- Review charitable giving and tithing. Consider adding additional amounts before tax year-end.
Donna Hein is editor of Thrivent Magazine.