Your Annual Financial To-Do List
While critical issues, like a job loss, will require you to review your financial plan immediately, the absence of big changes does not mean it’s not a good idea to review your plan on a regular basis. An annual review of your financial plan and associated worksheets is a great idea to make sure you stay on track and surface any new risks to the achievement of your goals.
Following is a list of things to do annually:
- Check your credit report and make sure it is accurate. If there are inaccuracies, follow-up with the reporting agency
- Review your financial plan to make sure your goals are still relevant, and the timeline associated with them is still achievable.
- Review investment performance. Investment performance will vary significantly from one year to the next. While you should review all documents (quarterly/monthly) that you receive on your investments, look at your year-end reports to determine whether the investment choices you’ve made are still relevant and appropriately balanced/allocated.
- Review your spending habits. Look at the records of your credit cards, and in your financial plan. Look carefully at how much you are spending and where you are spending, and ask yourself if these habits are continuing to serve your long-term needs.
- Re-evaluate the risks associated to your plan. Risk levels change for different aspects at different times in our lives. For example, medical expense risks rise, typically, as we age.
- Factor in any changes in tax situations.
- Look at returns on money market accounts or other forms of low-interest/low-risk investments.
- Look at your plan to determine its completeness; have there been any major changes in income, expense or goals that will impact the long-term accuracy of the plan.
- Look at your credit cards. Again, it is important to always look at any correspondence from your creditors; however, an annual review of the terms and conditions of your cards is an important step.
- Congratulate yourself for doing the right thing financially. Doing an annual review of your plan and your financial situation is a big part of staying on course, and you should be congratulated for taking the time and effort.
Looking at the details of your financial plan once a year will help to make sure that your goals are still relevant to your needs, you are still on track to achieving your financial goals, and that any new risks are known and factored into the overall plan.