Saturday Finances—5 Things to Review Annually

I'm no expert.  I'm just paying attention.  

Financial Spring Housecleaning

Clean up your finances!

Review your finances once a year.

1.  Check your investments.  

Start with a list.  What are you investments & where are they? 

Make a list of all of your investments & where the accounts are located (which bank, brokerage or savings firm).  

Consider consolidating your accounts under one roof.  Finances are easier to keep track of when you can see them all in one place.

If you have managed investments, check in with your account manager(s).  Pay attention to what they've done with your money.  Check their fees.

Is each account doing what is it supposed to do?  

Which accounts are designed for long-term savings (e.g. IRAs, 401(k)s, college trust funds, old workplace funds) and which are designed for short-term (still-supporting-my-adult-children fund, vacation fund, etc.)? 

Check the diversification mix of your investment portfolio.  A properly balanced portfolio helps manage risk.  Adjust holdings to suit your target level of risk and financial need.

2. Check tax efficiency.

Fidelity:  "Put tax efficient investments which generate taxable income—like taxable bonds and real estate investment trusts—in tax-deferred accounts like 401(k)s and IRAs.  For those investments which are more tax efficient—like stocks and ETFs (Exchange Traded Funds) held for more than a year—place them in taxable accounts."  

3.  Check your insurance. 

Make a list of all of the types of insurance you have.  Review your costs & benefits.  If you reduce life insurance, think about increasing your health insurance coverage to include more types of coverage (e.g. dental, eye exams, etc.).  If it's appropriate, think about long-term care insurance.  

4.  Review your estate plan.
  • Make sure that key individuals know where to find your important documents.
  • Update the attorney contact info so that your loved ones know who to contact if you croak.
  • Update all of your passwords & keep a hard copy with your trust or will.
  • Update beneficiaries for insurance plans, bank accounts and brokerage accounts.  This is very important, and it can be done easily online.
  • Update your safe deposit box.  Make sure that the person you are leaving in charge of your estate is a co-owner, is signed into the log, and has one of the (2) owner keys. 
  • Update your health care proxy & Power of Attorney documents.  Make sure that the contact info is current.
  • Talk to your executor or successor trustee & inform him or her of any changes.  If you move the location of your documents, tell your successor where everything is.

5.  Evaluate your long-term goals.

Think about your financial future.  How will caring for yourself and others affect your financial future?
  • Review your goals.  
  • Be realistic.      
  • College savings — It's a nice idea, but don't count on every kid going to college.  If you start a college fund for one of your little geniuses, keep ownership of the account in your name only.  Despite the tax benefit of a college trust fund, they may not be college bound, and your money may be needed elsewhere.
  • Put your money to work.  Start small & work your way up.
  • Use online tools for planning & guidance.   

be • a • good • money • manager

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