This is the first part in a two-part series on tidying up your financial house.
Signs of spring will soon be everywhere. The days will lengthen, and windows will be thrown open to let in sunlight and fresh air. A sense of renewal will be in the air and with it the urge to take a fresh look at our homes – inside and out. Spring will also bring with it tax season, a time to gather paperwork and review the past year, an ideal time to think about finances and maybe do a little spring cleaning of your financial house.
An annual review of your finances is a necessity at this time of year, not just for tax purposes, but because finances are dynamic; needs and goals change, new savings, investment, and insurance products become available, family incomes increase, children are born, others are off to college, estates increase, jobs change.
Regular annual reviews provide a much-needed opportunity to be certain your past financial decisions are still moving you in the direction of your goals...and if not, to change them as soon as possible.
This Spring, as you pick up the rugs, dust behind the bookcase, and organize the garage, get your financial house in order too. Start by gathering and organizing your paperwork: life insurance policies and beneficiary designations, year-end statements from your retirement and investment plans, disability and long term care policies, last year's tax return, your spending records, and other financial documents.
Next, plan to meet with your insurance agent, financial services representative, tax advisor, and/or your legal advisor to discuss the past year as well as your plans and goals for the coming year.
Here are some suggestions for preparing for these meetings in advance:
List any changes in your work and/or personal life that took place in the last 12 months. These may include a job change (including retirement), the closing or opening a business, a new business partner, a new home, a new baby, marriage, or divorce.
Has your spending changed? Have you taken on a sizeable business or personal loan? Have you incurred new expense that will recur or continue into the coming 12 months? List these new expenses too.
List any changes in your work and/or personal life that will take place in the next 12 months. On the flip side, it's wise to consider the impact of planned or predictable changes that will take place in the coming year. These fall into the same categories, job changes, a new baby, a new home, etc. Considering these events proactively will help you plan ahead and put any necessary changes in motion so that you're ready for these events when they happen.
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