Financial Planning: Spring Cleaning Financial Checklist


Along with the standard spring ritu­als of preparing your taxes, adjusting your clocks for daylight-savings time, testing your smoke detectors, mulching your yard and watching your March Madness brack­et implode, consider making the following financial checklist part of your ritual.

• Take a Financial Snapshot. Would your loved ones know how to manage the finances if you passed away suddenly? Organizing your finances is the key to understanding them, and to making plans for their growth. First, list every asset you can possibly think of from invest­ments to tangible personal property, and assign an objective value to each. Next, list every debt or liability that you have. Mortgages, credit cards, tax debts and student loans all apply. Your net worth is your aggregate assets less your aggre­gate liabilities. Compare your net worth now to what it was last year and con­sider changing spending habits accord­ingly. Second, organize all login informa­tion for your accounts. Because of the sensitivity of this information, it is likely you have this information concealed or encrypted; make sue that your trusted loved ones know how to access this information. Third, in most families, one person manages the finances and has a better understanding of the overall finan­cial picture. Prepare a financial cheat sheet, containing the institution, account numbers for those institutions and any other pertinent information that may be needed, including CPA’s lawyers and other professionals.

• Create or Replenish an Emergency Fund. Personal finance advisors recommend maintaining a minimum of six months of living expenses in cash or other liquid funds, adjusting accordingly for families with sizable monthly expenses relative to other assets. Just as the TARP banks are required to pass a Stress Test, consider whether your family can handle a finan­cial hiccup in stride.

• Start Budgeting. Tracking everything you spend down to the last dollar can be difficult. So, focus on two or three prob­lem areas, such as dining out or clothing purchases.

• Start or Increase Retirement or Educa­tional Contributions. It is never too late or too early to star t saving for retirement or educational needs. Check to see if you are maximizing your employer-sponsored retirement plan and what additional savings places you may have available to you, including IRA’s and 529 Plans for your children’s education.

• Rollover Old Retirement Accounts. Did you switch jobs last year and just leave your 401k account in your old employer’s plan? Consider rolling it over to your new employer’s plan or, better yet, to an IRA. Consolidation accounts will allow you to better understand, monitor and manage your investments.

• Rebalance your Investments. Stocks and bonds can move in very different direc­tions in short periods and your 50/50 al­location to stocks and bonds may have shifted. Check whether your current asset allocation is consistent with your objectives and risk tolerance. For com­parison purposes, “Age in Bonds” is an oft-repeated rule of thumb.

• Review Home, Auto & Life Insurance. Your insurance needs change from year to year. Please take the time to review your policies and available coverage.

• Review Beneficiary Designations. Who is the beneficiary of your retirement ac­count or life insurance policy? If you have not checked in a while, it is a good idea to do so, especially if you have had a change in family status the last few years. Remember that your estate planning documents do not supersede the beneficiary designation on these ac­counts.

• Do a Home Inventory. If your home burned to the ground tomorrow you would never be able to replace certain items. However, you can make sure that you are compensated from your insurance carrier for their loss. Tour your home with a camera and document everything you would want an insurance company to replace. Add up the re­placement costs for all of those items to make sure you have enough insurance.

• Backup Important Records. In conjunc­tion with the foregoing, it is valuable insurance to maintain backup copies of important records (e.g. estate planning documents, birth certificates, deeds, insurance policies, tax returns, etc.). Al­ternatives to hardcopies, such as exter­nal hard drives and online storage, exist for this purpose. Do the same for digital photographs and home movies.

• Check Credit Card Statements for Sus­pect Fees and Charges. How closely do you inspect your statements? Take the time to go back and check for inappro­priate fees and charges, especially if you have vendors with automatic monthly charges.

• Review Credit Reports. Check reports from all three major credit bureaus once each year at Closing old inactive accounts may ding your credit score but can provide some peace of mind.

• Redeem Reward Points. The dirty secret of gift cards and rewards points is that they expire or decrease if not used or the corresponding account is inactive. Even if they do not expire, keeping them around increases the odds that you will lose or forget about them.

• Review your Estate Plan. A review is appropriate whenever you experience life-changing events, such as the birth of a child, separation from a spouse, disability or terminal illness, death of a family member, or major changes in your finances or in the estate tax law.

• Contact your Cable Company. I person­ally believe that cable companies aim to charge you as much as they believe you are willing to pay. With a simple call you may learn that they are currently of­fering a “promotional discount for val­ued customers.”

A little preventative maintenance can go a long way in avoiding larger problems down the road.


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