As we move into a new year, that may come with new year’s resolutions. Common goals are losing weight, exercising more, spending more quality time with friends and family, eating better, etc. The start of a new year also provides the perfect opportunity to reflect and look for ways to improve your fiscal fitness – not only for today’s benefit but also for your future.
Every month this year, we’ll provide a blog post that identifies a few ‘must-dos’ or ‘good-to-dos’ to get yourself in better financial shape. Kicking off this month, we have 6 steps to get you going for the year ahead:
- Tackle Your Debt: The first step to financial fitness is to address high-cost, non-deductible credit card debt. Channel your efforts into paying off these debts to free up resources for more productive financial goals – like building your emergency fund or investing. If you’ve started an emergency fund, try to save the equivalent to three to six months of everyday expenses as a safety net to smooth over unexpected challenges.
- Update Your Financial Statements: Take control of your financial picture by creating or updating a cash flow statement (i.e. budget), that compares your annual income to expenses from the prior year. Additionally, create a statement of personal net to understand your overall financial standing. These documents serve as valuable tools for assessing and strategizing your financial goals. We can always help with these or if you want to get started with a cheaper option, this is a great DIY place to start.
- Portfolio Checkup: Regularly review your investment portfolio to ensure it aligns with your time horizon and risk tolerance. Market fluctuations may cause your portfolio to deviate from its target, so consider rebalancing to maintain alignment with your financial objectives. If you want another look, we’re happy to partner with you on a portfolio review with recommendations!
- Retirement Planning: For retirees, it’s important to combine portfolio rebalancing with cash-flow planning for the upcoming year. Make sure to review and confirm your contribution limits for workplace retirement plans – and maximize any employer matches. Individuals age 50 or older should explore catch-up contributions to boost their retirement savings, like taking advantage of the additional $7,500 allowance in 2024 for 401(k) and 403(b) plans.
- Income Tax Planning: Keep an eye on the IRS Tax Calendar for other federal tax deadlines throughout the year – especially if you’re self-employed. Staying ahead of quarterly estimated tax payments can help more than you think. Also, make sure you get and keep track of any annual tax forms (1099, 1098, and W-2) typically by the end of January to make filing your taxes easier ahead of the April federal income tax deadline.
- Stock Options and Awards: If you’re granted stock options, restricted stock units (RSUs), or restricted stock awards, talk to someone about the tax implications before making any decisions. Each type has unique tax treatments, so learn about the impacts to your bottom line before exercising options or selling shares.
As you charge into this new year – it’s already off to a busy start(!) – commit to getting into better financial shape for your future self by taking these smart steps. By managing debt, updating financial statements, optimizing your portfolio, planning for retirement, staying tax compliant, and making informed decisions regarding stock options, you’ll set the foundation for a financially successful year – and many to come!