With the first month of 2012 already drawn to a close, it is probably a good time to look back at those resolutions that you made, those you should have made and those resolutions that have may have already fallen behind. Here are a few financial resolutions that you may want to add to the list. Some of these will only take a short time on a snowy day.
As you should be starting to receive the annual flurry of year end tax documentation, there are a couple of things that you might resolve to do. First, set up a file folder to capture all the 1099s, W-2s etc. Getting them all in one spot now will save an awful lot of headache and hassle when you head off to start your 2011 tax returns. Second, look for opportunities to consolidate your accounts into one place for your taxable accounts and one for your qualified accounts. Besides eliminating all that paper mess, this consolidation will make your allocation and diversification decisions much easier to understand and implement. It may be even more important for your qualified accounts.
If you will reach your 70th birthday this year, be sure that you are clear on the important dates and requirements for beginning your IRA distributions.
There are new rules that will go into effect this year concerning the tax treatment of mutual fund shares that are purchased/sold in 2012 and beyond. You may have already been asked to choose among a number of different tax treatments. While you can always change the choice you have elected, you cannot change it after you have made your sale. Please resolve to ask any questions you may have about this most important tax manner soon.
Resolve to take the time to dive a little deeper into your 401k (or 403b etc.) account. The limits for how much you can contribute have been raised for this year. If you have, or will, reach the age of 50 this year, you may also be eligible to take advantage of catch up provisions. This will enable you to put away even more of your earnings on a pre-tax basis. You should also check to see if there are any new options in your plan. New investment choices may help to more effectively diversify your account. Many larger plans have begun to include Roth options as well. Even if you cannot afford to make the maximum contributions, resolve to increase your contributions by at least 1%. You’ll be glad you did.
While you are digging into your retirement plan information, take a quick look at the beneficiaries you have listed. Many people are surprised to find that there are changes that they intended to make that never got done. This is also important for your IRA accounts, your will or trust or insurance policies. Resolve to check out the beneficiaries to your financial affairs. A little work now could save a lot of trouble later.
Some additional financial resolutions you might consider: Mortgages rates are the lowest in our lifetimes. Resolve to look into whether refinancing may make sense for your situation. When was the last time you had your personal insurance reviewed? Resolve to look into whether you are getting the best bang for your buck with any discounts available for bundling your car and house together or whether your deductible still makes sense. Resolve to save some money and improve your insurance coverage in 2012.
Take a look at your bank. Is that “free” checking account you signed up for really free? Do you still need the points that they once offered on their credit card? Are there any other services they offer that you aren’t taking advantage of?
Are you set up to make any of your regular bill payments electronically? Besides saving the postage and supplies, many of the these institutions make it easier to set up payments in advance and also to send reminders for you so that late payment charges will be a thing of the past. Take a look at your cell phone plan. Is it still appropriate for your actual usage? Can it be bundled with your home phone for additional savings? Resolve to look at a couple of the biggest ticket items in your budget, you may be surprised to find out how much money you might save.
Here’s wishing you and your family a successful and healthy 2012!
Sheldon Harber is President of Asset Strategies, Inc., a financial planning and wealth management firm in St. Louis, MO.