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. A lot of people put off financial planning or avoid it altogether.
At Schwab, we view personal financial planning as an ongoing, lifelong process, not a one-time event. When you're proactive about your financial planning and break it into small, achievable tasks, it's a lot less daunting—and it can pay huge dividends to you and your loved ones over time. The following personal finance calendar should help you get started.
- Resolve to make yourself financially fit in 2023:
- Manage your debt. Start by paying off all of your high-cost, non-deductible credit cards, and then establish an emergency fund equal to three to six months of expenses, if you haven't already.
- Create (or update) your cash flow statement (prior year income minus expenses) and statement of personal net worth.
- Give your portfolio a checkup, and make sure its mix of assets still matches your time horizon and risk tolerance (Schwab clients can log in and use the Portfolio Checkup tool for this). Market changes can cause your portfolio to drift away from its original target asset allocation, because as investments gain and lose value they become a larger or smaller part of your overall portfolio. This may be a good time to rebalance your portfolio back to your chosen asset allocation.
- If you're retired and drawing from your portfolio, you can combine your portfolio rebalancing with your cash-flow planning for the next 12 months.
- Double-check if and how much you can contribute to your workplace retirement plan. If possible, try to contribute enough to take full advantage of any available employer match. Also, if you're at least 50 years old (or will turn 50 this year), consider making additional catch-up contributions if allowed (up to $7,500 in 2023 for 401(k) and 403(b) plans).
- If you don't pay enough income tax through regular payroll withholding, file your fourth-quarter estimated income tax payment by January 17. (See the IRS Tax Calendar for other federal tax items due throughout the year).
- Any annual tax forms 1099, 1098 and W-2 should be mailed to you no later than January 31 (February 15 for some 1099s).
- If your employer has granted you stock options, restricted stock units (RSUs) or restricted stock awards that are vesting, you'll need to decide how to handle them. Tax treatment is slightly different for each one, so make sure you understand the impact before exercising options or selling shares.
- 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.
- 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 February. Schwab clients can access tax tools and resources on schwab.com.
- If you receive an annual bonus from your employer, use it thoughtfully to increase its potential benefit. It's tempting to splurge, but consider using a bonus to pay down debt, contribute to your retirement plan, or build an emergency fund.
- Check your credit report. You're entitled to a free copy of your credit report every 12 months from each of the three nationwide credit reporting agencies.
- File your income tax return by April 18. If you're requesting an automatic six-month extension, you still need to pay any taxes due by April 18.
- April 18 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 April 18.
- Create (or update) an inventory of your home and personal property for insurance or estate planning. Use your phone to record a video of your valuable possessions, and then store the video in a secure, remote location.
- Review your estate plan.
- Perform a mid-year 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).
- If applicable, second-quarter estimated income tax payments are due by June 15.
- Build or refresh your money skills. Add at least one good book on personal finance or investing to your summer reading list.
- If you took a vacation over the summer, compare what you spent to the amount you projected 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, third-quarter estimated income tax payments are due by September 15.
- If you want to establish a SIMPLE IRA this year for your small business, the account must be opened by October 1.
- If you have children heading to college next year, keep in mind that the Free Application for Federal Student Aid (FAFSA) window opens on October 1. It's best to complete the FAFSA as early as possible because states and colleges use it to award their own grants, scholarships and loans, and that aid is limited.
- File your income tax return by October 16 if you requested a six-month extension back in April.
- If you want to establish and fund an individual 401(k) or SEP IRA for 2023, the account must be opened by your tax filing deadline plus any extensions, which is typically October 16 in 2023 for most small businesses.
- Run a projection of your current-year income tax liability to get a head start on your year-end tax planning.
- As open enrollment season rolls around at work, take the time to review your health insurance coverage and other employer benefits.
- Don't charge more for holiday gifts than you can comfortably pay for in full when the January credit card statements come around.
- Take time to give thanks for another year of financial success. Review your charitable giving program and consider making tax-deductible gifts to charity or to a donor advised fund account before the end of the year.
- If you have investments that have lost value during the year, consider tax-loss harvesting to potentially lower your tax liability and better position your portfolio going forward.
- If you're 73 or older in 2023, don't forget to take your annual required minimum distribution (RMD) from your IRA or 401(k) by December 31. Learn more here about when and how to take RMDs.
- Get your annual Social Security Statement. Compare your earnings record against your old tax returns for accuracy.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.
Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.
Investing involves risks, including loss of principal.
Rebalancing and asset allocation strategies do not ensure a profit or protect against a loss in any given market environment. Rebalancing may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events may be created that may affect your tax liability.
This information does not constitute and 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.0123-2VUX