A Financial Checklist for the New Year

Some tips to keep your financial plan on track.

The beginning of a new year is typically a good time to make a “fresh start.” This can include reviewing and updating your financial plan to ensure that you are on the right track, and that it correlates with your present situation.

With that in mind, scheduling a time with a financial-planning professional to go over your savings, tax, and legal strategies can help you put the right tools in place—both for yourself and for those who may be depending on you.

The Four Critical Areas

While everyone’s financial strategies differ, based on their unique needs and objectives, there are four primary areas that everyone should pay attention to: 

Reviewing Account Titling and Beneficiaries

Making sure that your financial accounts and other assets are properly titled is a vital step in keeping your plan on track. This is because account titling can make a big difference in how things are handled when various changes occur. In fact, many people unwittingly title accounts in a way that could undermine their overall financial, retirement, and estate plan. “Asset titling,” by contrast, refers to an asset’s legal form of ownership. The most common account titling options are:

  • Individual accounts – If some or all of your assets are individually titled in your own name, it means that you are the one who solely makes decisions about them. When assets are titled in your name alone, they will often pass according to the terms of your will or trust, provided that the assets do not include a specifically named beneficiary. The assets that are in an individual account will also be added to your overall estate value. It is important to note, though, that funds and property in individual accounts can also be subject to probate upon your passing.
  • Joint tenants with right of survivorship – Assets that are titled as joint tenants with right of survivorship will pass directly to the other individual(s) who are named on these accounts when one of the account holders passes away. While opposite-sex married couples often use this form of asset ownership, it can also be beneficial for same-sex unmarried couples, or even two (or more) related or unrelated individuals, as the assets bypass probate and the account continues in the survivors’ names.
  • Tenants in common – Tenants in common own the percentage of assets in an account that is in proportion to what they contributed. So, for instance, if Jane contributes $3,000 to an account, and Julie contributes $7,000, Jane will own 30 percent of the account value. When you pass away, assets in these types of accounts can pass to others according to your will, and other account holders are not automatically entitled to them.

Another key aspect of reviewing your accounts is checking to make sure that the beneficiary designations are up to date. There are several account types that have named beneficiaries, such as IRAs (Individual Retirement Accounts), employer-sponsored retirement accounts (such as a 401k), and life insurance.

It is absolutely essential to review beneficiary designations at least once a year—or even more often if you have gone through a major life change such as marriage or divorce, the death of a spouse or partner, or retirement. Otherwise, you may find that an ex-spouse or partner ends up with money or other assets that are no longer intended for them.

Budgeting for Holiday Spending

It is recommended that you budget for these expenses, and that you have a plan in place for paying down this debt. If you put a significant amount of purchases on multiple credit cards, you should first focus on paying down the card with the highest interest rate. That way, you can better manage and reduce the interest you pay to credit card companies.

Start saving now for next year’s holiday spending. Saving just $50 per month starting now can yield $600 by the time December rolls around. 

Reviewing Savings and Investment Plans

The end of the year is also an ideal time to review your savings and investments. If you have been putting off “paying yourself first” (i.e., contributing to savings rather than only paying bills), now is a good time to start.

This strategy can also include contributing the maximum amount that you can to your employer-sponsored retirement plan, if one is available. That is because these, as well as IRA accounts, allow the growth to take place tax-deferred or tax-free. This can help you grow your savings much faster, compared with fully taxable accounts.

Implementing or Updating Legal Documents

Although reviewing legal documents is not typically appealing, it is a necessary part of your overall financial and retirement planning. In this case, if you do not yet have a healthcare proxy and/or financial powers of attorney set up, it is essential that you do so as soon as possible.

These legal safeguards allow someone you know and trust to make important decisions for you if you are no longer able to do so yourself. These protections are particularly important for LGBTQ and other types of blended modern families. Otherwise, important decisions could be made by people who may not necessarily abide by your wishes.

Are You Financially Ready for 2023?

Growing and protecting your finances can require many “moving parts” to fit together seamlessly. For this reason, many people shy away from doing anything about it. But this can be disastrous in terms of your future financial security, as well as that of the people you love and care about.

Given that, it is important that you talk over your objectives with a financial-planning professional who can guide you in the right direction. Working with a professional who is also well-versed in planning for LGBTQ individuals and families is key to making sure that all of your specific objectives are included in your plan.

This article appears in the January 2023 edition of OutSmart magazine.




Grace S. Yung

Grace S. Yung, CFP, is a certified financial planner practitioner with experience in helping domestic partners plan their finances since 1994. She is a principal at Midtown Financial LLC in Houston and was recognized as a “Five-Star Wealth Manager” in the September 2017 issue of Texas Monthly.
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