Managing your personal finances can feel like another full-time job, and for some, assisting people in those managing their personal finances is their full-time job! While there are things you should be doing more often than others (like monitoring your monthly budget and making sure to pay all of your bills), others may only roll around once a year (like filing your taxes).
But as your life continues to get busier, some of those once a year personal finance “to do’s” may fall to the wayside.
To help keep your personal finances on track, we’ve compiled an annual to-do list for all of those activities that are best tackled early in the new year every year. So like spring cleaning, let’s make the early months of every year personal finance planning season. Here are the 9 things that should be on everyone’s financial to-do list.
1. File Your FAFSA (Student Financial Aid Application)
Whether you’re a student yourself or the parent of a student, filing you annual FAFSA early is critical to getting the best financial aid package for you or your dependent student in the coming school year. Some of the information required will be taken from the previous year’s tax returns, so this may just be the push you need to get a head start on your taxes, too.
2. Do Your Income Taxes
You know that you have to do them, and even though you have until April 15 (or later if you file for an extension), you might as well get a head start.
Doing your taxes is no fun, but having all the resources you need in one place will make the task easier. Giving yourself enough time also gives you the benefit of having time to check and double check, making sure that you’re getting every deduction and tax credit available to you.
3. Do Your Annual Financial Checkup
Before you can make goals for the new year, you need to assess where you stand right now.
What’s your net worth? Where are you in terms of meeting your financial goals from last year? What new developments have come up in your personal finances since last year? This is probably a good time to check your credit score. You are legally entitled to one free credit report every year (and you can purchase more often, as necessary).
4. Calculate Your Debt to Income Ratio
Your financial situation can change drastically over the course of a year, so doing this simple calculation will tell you quickly if there’s a red flag in your finances. It’s also a good lead-in exercise for calculating your net worth.
5. Calculate Your Net Worth Statement
Your annual financial checkup should include an updated net worth statement. In fact, ideally you would calculate your net worth quarterly to keep track of progress. But at the very least, you should calculate your net worth at the beginning of each year as a way of monitoring financial progress in an objective way. Your net worth will also help you to set your goals for the year, which is the next to-do on our list.
6. Set New Financial Goals
To stay motivated towards reaching your short-term and long-term financial goals, you should review them at the start of each year and make any changes.
Did you meet one of your goals last year? Do you need to reassess priority on your existing goals?
7. Set Up Your Budget for the New Year
Situations change over the course of a year, and a new budget to go along with your new goals will keep you on the right track. Do this after you’ve established your financial goals.
8. Bone Up on How This Year’s Tax Law Changes Will Affect You
You don’t have to be a tax guru, but having an idea of new changes in the tax laws will help ensure you don’t pay any more taxes than necessary. For instance, have the limits on IRA contributions been raised?
9. Tweak Your Income Tax Withholding
If your personal situation has changed (you got married or divorced, had a child, lost a dependent, bought a house, had a big change in income, owed taxes last year, or got a large refund) you should redo your W-4.
If you have changes to make to your W-4 in terms of filing status or number of dependents, you might also want to take the opportunity to review and update your beneficiaries and your will.
The Annual Financial To-Do-List Bottom Line
You certainly don’t have to complete these to-do’s all at once the first week of the new year, but tackling a few each week will have you in good shape quickly and you’ll feel more in control of your financial situation.