Financial Checklist: 10 Priorities for the New Year

Carrie Schwab Pomerantz
Posted: Jan 02, 2013 12:01 AM

Dear Readers, Determined to get your financial house in order this year, but feeling overwhelmed at the thought? You're not alone. Use this checklist to get started -- and keep it handy to mark your progress throughout the new year.

The new year is a great time to review your finances, refresh your goals and maybe set some new priorities. Getting a handle on your finances can seem daunting, especially if you try to do it all at once. However, if you take it one step at a time -- and share the journey with your spouse, partner or family -- you might actually find that it's a rewarding experience in many ways.

The following checklist can act as a starting point for your thinking and open the door to family discussions on spending and saving, the attitudes you share and how to resolve differences of opinion. It can also provide a framework to help you take practical action based on some real facts and figures.

Use this financial checklist to stay on track

--Get organized. First, take a look at your recordkeeping. Do you know where all of your important documents and statements are? Could you streamline by keeping some records electronically? Next, make a list of all your accounts and where they're located. Consider consolidating them to make things simpler. Also make a list of your advisors with names and contact information. Finally, put important dates on your calendar. In other words, estimated taxes, property taxes and any Required Minimum Distributions from retirement accounts.

--Review your net worth. This simply means writing down and adding up what you own (your assets) and then subtracting what you owe (your liabilities). Are you in the plus or the minus? Knowing your net worth will help you decide next steps for saving, debt reduction and budgeting. It also gives you a way to measure future progress.

--Write down your goals. What do you want to accomplish financially this year? What about in five or 10 years? Having realistic goals will help you make smarter saving and spending decisions, balancing current needs and future desires.

--Refine your budget. With your net worth and goals in front of you, take a serious look at your budget. Add up your income, itemize your expenses (both essential and discretionary) and do the math. If you're coming up short, you'll need to prioritize. Decide where you can cut back if necessary. No matter what, make savings a line item on your list of essential expenses.

--Get on top of debt. Carrying too much debt can undermine the best-laid financial plans. An industry rule of thumb is that no more than 28 percent of your pre-tax income should go toward home debt; no more than 36 percent should go toward all debt (home, car, credit cards, etc.). If possible, it's wise to stay well below those limits. To efficiently pay down nondeductible consumer debt, focus on the highest interest balances first. You might also think about refinancing your house as a way to save on your monthly expenses.

--Go automatic. Put as much on auto-pay as possible -- recurring payments as well as contributions to savings.

--Save for retirement. While you're at it, make sure that saving for retirement is also automatic, either through contributions to a company retirement plan or to an IRA. Increase your retirement savings if you can.

--Check your insurance. Review your insurance coverage. Health and auto insurance are both a must. If you have dependents, consider life insurance.

--Review your portfolio. Make sure your investments still reflect your goals and feelings about risk. If not, it's time to reallocate.

--Create an estate plan. If you don't have a will, make this a priority, especially if you have children for whom you must designate a guardian. Also, check that the beneficiaries on your retirement accounts and insurance policies are up to date.

Make it a family commitment

This may seem like a lot to handle, but remember, you don't have to do it all at once -- or necessarily all by yourself. You could divide these tasks with your spouse or partner, and then review the information together to agree on a plan of action. If you have kids, get them involved, too, as appropriate for their ages. It could be a great lesson in money management, as well as a motivation to set their own savings goals.

Good financial habits have to be practiced. The earlier you start, the easier it gets. And working together makes it easiest of all. Here's to a financially fulfilling 2013!

Carrie Schwab-Pomerantz, CERTIFIED FINANCIAL PLANNER(tm), is president of Charles Schwab Foundation and author of "It Pays to Talk." You can e-mail Carrie at This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at