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Personal Finance Calendar for 2009 by Rande Spiegelman, CPA, CFP®, Vice President of Financial Planning, Schwab Center for Financial Research December 29, 2008
Do you spend more time planning your annual vacation than you do thinking about your personal finances? And when you finally do get around to thinking about your finances, do you usually end up waiting until the last minute? If so, you're not alone.
Admittedly, it is a lot more fun to make plans for that next big summer trip or the upcoming holidays than it is to review your health insurance options, plan for your estate, or make sure your retirement is on track. But, the effort is well worth it and can pay huge dividends for you and your loved ones over time.
At Schwab, we view personal financial planning as an ongoing, lifelong process, not a one-time event. Of course, monitoring your progress on an on going basis doesn't mean you should obsess over your finances every day. You have better things to do (like planning your next vacation). On the other hand, it doesn't mean you just pull out the statements and spreadsheets once a year to see how you're doing and then forget about them until next year.
Just as financial planning is not a one-time event, it's not a once-a-year event, either. Ideally, financial planning is a year-round exercise. After all, it doesn't do much good to procrastinate on your tax planning until New Year's Eve rolls around and your options are severely limited (let alone until right before the April 15 deadline, when it's too late to do anything but pay whatever Uncle Sam tells you to pay).
If you spread things out throughout the year, it's manageable. And, with a little organization, it shouldn't be too much hassle, either. Hopefully our personal finance calendar will help you get started:
January
Resolve to make yourself financially fit in 2009:
Manage your debt. Start by paying off all of your high-cost, non-deductible credit cards, and then establish an emergency fund equal to 3–6 months of expenses, if you haven't already
Create (or update) your cash flow statement (income minus expenses) and statement of personal net worth as you monitor your progress toward your long-term financial goals.
Give your portfolio a checkup—review the performance of your stocks, bonds and mutual funds as you rebalance back to your target asset allocation mix. If you're retired and drawing down income from your portfolio, combine your portfolio rebalancing with your cash flow planning for the next 12 months.
Double-check your employer retirement plan contribution percentage.
If you're at least 50 years old (or will be by December 31), consider making an additional catch-up contribution. At the very least, try to contribute up to the point where you take advantage of any available employer match. If you don't pay enough income tax through regular payroll withholding, file your fourth-quarter 2008 estimated income tax payment by January 15 (see the IRS's 2009 tax calendar for other federal tax items due throughout the year).
Annual tax forms 1099, 1098, and W-2 should be mailed to you by your various providers no later than January 31.
February
Check your insurance policies (property and casualty, liability, health, disability, life) to be sure you're not paying too much for the wrong kind of coverage.
It's possible certain mutual funds could restate their distribution information after your initial Form 1099 is mailed to you at the end of January. Though not common, when such fixes are necessary, a corrected 1099 is usually mailed sometime in the month of February, so this shouldn't stop you from getting a head start preparing your income tax forms. If you're a Schwab client, you can log in to access tax tools and resources on Schwab.com.
March
If you turned 70 ½ last year and didn't take your first-year required minimum distribution from your IRA by December 31, you have until April 1 to do so.
File your income tax return by April 15. If you're requesting an automatic six-month extension, you still need to pay any taxes due by April 15.
April 15 is also the last day to make a contribution to your IRA or Coverdell Education Savings Account for the prior year.
If applicable, first-quarter estimated income tax payments are due by April15.
May
Create (or update) an inventory of your home and personal property. Use a video camera to make a record of your valuable possessions for insurance (and/or estate) purposes, and then store the tape (or DVD) in a secure, remote location.
Perform a midyear review of your finances to be sure you're on track:
Double check your actual year-to-date income and expenses against your cash flow projections.
Are you on track with your retirement contributions and other savings?
Run a projection of your income taxes to be sure you are not paying too much or too little income tax (either through withholding or quarterly payments).
Planning a June wedding? Don't forget to update your financial plan accordingly.
If applicable, second-quarter estimated income tax payments are due by June 15.
Keep learning—add at least one good book on personal finance or investing to your summer reading list. Meanwhile, check out Schwab's educational resources and consider signing up for an online workshop.
August
Compare what you actually spent on vacation to the amount you projected for in your annual cash flow plan. Start thinking about your holiday budget.
As the kids or grandkids get ready for school, think about establishing or contributing to a Coverdell Education Savings Account and/or 529 College Savings Plan on their behalf.
If applicable, don't forget to take the annual required minimum distribution from your IRA by December 31.
If you want to establish an Individual 401(k), SEP-IRA or other QRP (qualified retirement plan) this year for your small business, the account must be opened by December 31.
If you didn't receive your annual Social Security benefit statement on or around your birthday this year, request one from the Social Security Administration. Compare your earnings record against your old tax return info for accuracy.
As always, if you have questions or need help, please contact your Schwab consultant. If you're not yet a Schwab client but would like to learn more, a Schwab consultant can help. Call 800-435-4000 to get started.
Important Disclosures
This report is for informational purposes only and is not an offer, solicitation or recommendation that any particular investor should purchase or sell any particular security or pursue a particular investment strategy.
This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner or investment manager.
The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.
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