Financial Planning Month: 10 Ways to Check Your Finances

October is Financial Planning Month, making it a great time to review where you are financially, where you want to go, and whether the decisions you are making today are helping you get there.

Financial planning is about much more than investments or retirement accounts. A comprehensive financial plan can include cash flow, taxes, insurance, retirement, estate planning, debt management, employee benefits, and even conversations with family members about the future. And just as life changes, your financial plan should evolve with you.

You do not have to tackle everything at once. Financial Planning Month can simply be an opportunity to choose a few areas that deserve your attention. Here are some ideas to get started.

1. Revisit Your Financial Goals

Start by asking yourself a basic question: What am I working toward?

Your goals may have changed since the beginning of the year. Perhaps retirement is getting closer, or you are considering a career change, helping an aging parent, preparing to send a child to college, thinking about buying a home, or hoping to travel more.

Put some numbers and time frames around those goals. Instead of saying, “I want to retire someday,” consider: “I would like to have the option to retire at age 65 with enough income to maintain my current lifestyle.”

The clearer the goal, the easier it becomes to determine what financial steps may be needed.

2. Review Your Cash Flow

Many people know approximately what they earn but are less certain about where their money goes.

Review several months of bank and credit card statements and divide spending into broad categories. You may discover subscriptions you no longer use, expenses that have gradually increased, or opportunities to redirect money toward savings.

This does not necessarily mean cutting out everything you enjoy. Financial planning should help you use your money intentionally. If dining out, traveling, hobbies, or helping family members are important to you, they can be incorporated into your plan.

The objective is to make sure your spending reflects your priorities.

3. Check Your Emergency Reserves

Unexpected expenses are a normal part of life. Cars need repairs, homes require maintenance, jobs change, and family emergencies happen.

Having readily accessible savings can reduce the likelihood that you will need to sell investments at an inconvenient time or rely on high-interest debt.

There is no single emergency-fund amount that works for everyone. Your appropriate reserve will depend on factors such as job stability, household income, expenses, insurance coverage, and other available resources.

If your cash reserves have declined, consider making it a priority to rebuild them.

4. Review Your Retirement Savings

October is also a good time to look at your retirement accounts.

Are you contributing enough to your employer’s retirement plan? If your employer offers a matching contribution, understand what is required to receive the full match.

If you are age 50 or older, you may also be eligible to make additional catch-up contributions. Certain employees ages 60 through 63 may qualify for a higher catch-up contribution under current retirement-plan rules.

Also review how your retirement assets are invested. A portfolio that was appropriate five or ten years ago may no longer fit your goals, time horizon, or comfort with market fluctuations.

If retirement is approaching, begin thinking beyond simply accumulating assets. Consider how those assets may eventually generate income and how Social Security, pensions, retirement accounts, taxable investments, and other resources may work together.

5. Look for Tax-Planning Opportunities

Tax planning should not be limited to the weeks before April 15.

Before year-end, review whether there are strategies that could be appropriate for your situation. These might include increasing retirement-plan contributions, realizing capital losses to offset certain gains, making charitable gifts, contributing to a donor-advised fund, or considering a Roth conversion.

For retirees, it may also be worth reviewing required minimum distributions and, for those who qualify, Qualified Charitable Distributions (QCD) from IRAs.

Tax strategies can have consequences beyond the current year’s tax bill, so decisions should be coordinated with your tax and financial professionals.

6. Review Your Insurance

Insurance is an important part of financial planning because a plan is only as strong as its ability to withstand unexpected events.

Review your life, disability, health, homeowners, auto, liability, and long-term care coverage. Consider whether your coverage still reflects your current income, debts, assets, family responsibilities, and lifestyle.

Life changes such as marriage, divorce, a new child, retirement, buying a home, selling a business, or taking on caregiving responsibilities may significantly change your insurance needs.

This can also be a good time to review whether an umbrella liability policy is appropriate based on your circumstances.

7. Check Your Beneficiary Designations

Beneficiary designations are easy to overlook, but they can be an important part of an estate plan.

Review the beneficiaries on your retirement accounts, IRAs, annuities, and life insurance policies. If appropriate, also review transfer-on-death or payable-on-death instructions on other accounts.

Marriage, divorce, deaths, births, and changing family relationships can all create reasons to update beneficiaries.

Your beneficiary designations should also coordinate with your will or trust and your overall estate-planning intentions.

8. Update Your Estate-Planning Documents

Estate planning is not just for wealthy families.

At a minimum, many adults should consider having a will, financial power of attorney, medical power of attorney, and appropriate healthcare directives. Depending on your situation, a trust or other estate-planning strategies may also be appropriate.

If you already have documents, ask yourself when you last reviewed them. Laws change, assets change, relationships change, and the people you selected years ago to make financial or healthcare decisions may no longer be the people you would choose today.

Consult an estate-planning attorney regarding your specific circumstances.

9. Organize Your Financial Life

One of the simplest financial-planning projects can also be one of the most valuable: get organized.

Create a secure inventory of your bank accounts, investment accounts, retirement plans, insurance policies, debts, real estate, important documents, and professional contacts.

Make sure a trusted family member or appropriate person knows how to locate essential information in an emergency. This does not necessarily mean giving someone passwords or unrestricted access. It means making sure your financial life would not become a scavenger hunt if you were unable to manage things yourself.

10. Have the Conversations You Have Been Avoiding

Some of the most important parts of financial planning have little to do with spreadsheets.

Talk with your spouse or partner about retirement expectations. Ask aging parents whether they have powers of attorney and plans for long-term care. Discuss estate plans with adult children when appropriate. Business owners should consider what would happen to the company if they became disabled, retired, or died unexpectedly.

These conversations may feel uncomfortable, but having them before a crisis can make future decisions much easier.

Financial Planning Is a Process, Not an Event

You do not need to complete all ten items during October. Choose two or three areas that could have the greatest impact on your financial life and start there.

Most importantly, remember that financial planning is not about creating a perfect plan and putting it on a shelf. It is an ongoing process of making decisions, reviewing progress, and adjusting as your life changes.

Financial Planning Month is a good reminder to ask: Are my finances supporting the life I want today while also preparing me for tomorrow?

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. There is no assurance that the views or strategies discussed here are suitable for all investors or will yield positive outcomes. The opinions voiced here are for general information only and are not intended to provide specific advice or recommendations for any individual. Grace S. Yung, CFP®, is a Certified Financial Planner™ practitioner and the CEO & Founder of Midtown Financial Group, LLC, in Houston. Since 1994, she has helped LGBTQ individuals, domestic partners, and families plan and manage their finances with care and expertise. She is a Wealth Advisor offering securities and advisory services through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. Grace can be reached at [email protected]. For more information, visit www.midtownfg.com or www.midtownfg.com/lgbtqplus.10.htm.