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Calendar of Financial Planning
Financial independence and financial success are built around careful and thoughtful planning. In this article, you will find a month by month list of tips you can convert to goals to be used to build a solid financial plan for you and your family. Most of these tips can be scheduled in almost any order but all of them should be consistent with your written comprehensive financial plan created by you and your financial advisor.
January: Start the year out with a complete budget. Remember that the only way to build wealth is to spend less than you earn. This means that you must always plan to save regardless of your debts. This savings can be in the form of a personal savings account at your bank; a savings plan through your work; or a personal Individual Retirement Account. You must also have an emergency fund that can be accessed quickly. Be realistic about your budget because a budget that is too strict will discourage you. Once you have a savings set-a-side, no matter how conservative, take a look at your credit card debt. With proper planning, you can escape the debt trap and free yourself of financial worries. Finally, do plan for a little fun.
February: Book an appointment with your Financial Professionals in preparation for tax season. If you don’t have a good CPA in your life, get one. This is a good time to get your tax documents organized. Bring them to your meeting and strategize with your professional advisors for ways to ease your tax burdens for next year. You can also work with them to estimate your current tax liability and discuss whether there is any way to mitigate it for the year. Make sure you are ready to file your returns by or before April 15th or be ready to file an extension.
March: Review your Credit Report and FICO Scores. Federal law requires that consumers are allowed to review their Credit Report on an annual basis. It is important that you get a copy of your report through one of the free online resources. Then look carefully for errors on your report such as accounts that you have closed that still show balances or late payments that you don’t believe were late. A perfect credit score is 850. Good credit scores begin in the low 700 range. A good credit score saves you money on loans and can decrease your costs for insurances.
April: Adjust your W-4 withholdings at work. If you got a big tax refund last year you should go into your personnel office and adjust the amount of withholdings you authorize the company to take from your paycheck. A tax rebate of $1,800 seems like a great thing to get until you realize that it means you are giving the government a tax free loan for the year. It also means that your paycheck in short $150 per month that you could be putting into your 401K or personal savings account and be earning interest.
May: Invest. Look at your next pay raise or your extra cash from adjusting your withholdings as your opportunity to start investing. If you currently contribute to a retirement plan and a savings account and the amount reflects your goals; you have money to create an investment portfolio. There are a lot of different ways to invest and those investments should reflect your natural inclinations. If you are conservative by nature, your investments should reflect it. Your financial professional is the best person to help you identify your investing style and help you find the investments that align with it.
June: Audit your insurances. Every year there are changes in your work; the economy; and your family. These changes may be small or large but they still warrant a careful review of the insurances you carry to protect your family. Buy enough life insurance to cover seven to ten times your annual income. Health insurance is changing dramatically with the federal law that was enacted in 2009. Talk to your insurance agent or financial professional and determine whether or not your insurance will be in compliance and whether or not it is the most economical and best coverage possible. Similar reviews should be made of your auto insurance; home owner’s insurance and your rental insurance.
July: Your teen’s summer job and your taxes. A teenager that is listed as a dependent on your federal tax return can have repercussions on your tax bill. The amount of tax liability you could incur will be determined in part by whether your dependent is an independent contractor (she babysits for the summer and he mows the lawn) or whether they are employees. Talk to your financial professional and determine what those costs can be so you can prepare for them.
August: Set up a holiday fund. Christmas shopping may be the last thing on your mind while you are out on your boat at Lake Powell but now is really a good time to prepare for the expenses of Christmas. By setting up a special savings account for Christmas in August, you avoid credit card debt for the winter holidays. If you set a goal to spend only what is in your holiday savings account you can also avoid those spontaneous shopping sprees that create such angst in January credit card bills.
September: Update your will and Estate Planning. Estate planning involves creating strategies for protecting your assets, distributing them according to your wishes, and otherwise providing for your family. This is done by reviewing your Will, planning to reduce your taxable estate, and create the right strategy to provide for your spouse and heirs. A carefully developed estate plan made with the capable help of your financial advisors can help make the transition to a life without you easier for your family.
October: Review your options for Tax Breaks and Credits: There are a lot of efforts a various Federal and State levels to reward the American people to go green. A lot of these incentives come in the form of either tax breaks (a reduction in your tax owing) or tax credit (a credit paid to you at tax time). This is a time where being a good consumer can actually reward you so review any and all Federal Tax Credits offered under various government programs and see if any of them apply to you. A good example is the tax credit being offered for home owners who upgrade their “R” rating in their home by installing a more efficient heating and cooling system, upgrading insulation in walls and attics, and upgrading windows.
November: Review your Open Enrollment and 401K Retirement Plan. November is usually open-enrollment for most companies who offer employee benefits. You should be offered a chance to review and change your healthcare coverage, Cafeteria Plans, and 401K contributions. If you aren’t contributing to these programs, it’s time to invest. Talk to your plan providers and your personal financial professionals and determine the best enrollment options for you and your family.
December: Charitable deductions. Most of Americans have the option of giving all their money to the Federal Government or to reduce their Federal Tax obligation by giving to their favorite charities. Talk to your financial professionals. Should you clear out an appreciated stock by giving it to your charity? Congress looks like it will extend the Bush Era Tax rates so capital gains are going to stay low for at least two more years after which there is a possibility they will go away. Check with your tax preparer and determine if you have charitable deductions as a carryover from previous years. Work out the best plan for you and get those charitable deductions paid before the end of the year.
Greg Kemp is an Investment Adviser Representative and owner of Vantage Advisors, LLC. He has practiced professionally for over 35 years . He specializes in complex business and personal financial consulting, tax reduction and asset protection strategies. Mr. Kemp is presently licensed as a CPA with PFS credentials.
Vantage Advisors, LLC, is an independent Registered Investment Advisory firm. Vantage Advisors, LLC, is a seperate and distinct legal entity from Vantage Financial Solutions Inc., Vantage Strategies, LLC, and Kemp Commercial, LC, dba Vantage Real Estate. Gregory Kemp is Investment Advisor Representative of Vantage Advisors.
Our current disclosure statement is set forth on Part II of Form ADV and is available for your review upon request.
For more information contact us at (435) 628-6336
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