finAnCiAl
tiMeS
finAnCiAl CheCKliSt
for 2013
pilots know the importance of a checklist in ensuring a safe flight. A detailed financial checklist can help you avoid finan-
SHerry
ParSHley Phd
cial pitfalls in the New Year. Just like programming your GPS, finan-
cial skills, particularly around tax management and insurance strategies, are rapidly perishable
(that means easily forgotten when not used). I have identified five key items on which to focus.
• Set financial goals. You have probably made some New Year’s
resolutions. Make sure that at least three of your resolutions
relate to your personal finances. The key to setting goals is
to make them actionable, measurable
and achievable. You make them actionable by putting a verb in the sentence.
They become measurable when you include a cost estimate and timeline for
completion. The goals should be achievable so that you do not get discouraged if
you cannot achieve them. An example of
a well-written goal (and they should be
written down) is the following: Contribute 10% of my income to my retirement
savings with each paycheck. The objective is to write the goal in such a way
that you can answer “Yes” or “No” as to
whether you achieved the goal. Keep in
mind that the goals are a working document and you can adjust the goals as
needed. If you do not achieve the goal as
intended, establish a new goal and work
towards it, rather than giving up on the
process entirely.
• review your insurance policies. The beginning of the year
is a great time to evaluate all of your insurance coverage to
make sure you have sufficient coverage and that you plan
ahead to obtain quotes for renewing
coverage. For most of us, this would include health and auto insurance, at a
minimum. If you own a home, you will
also have property insurance. If you
rent, then you need renter’s insurance.
If your health insurance is through an
employer, you likely enrolled during
the open enrollment period, which is
typically in the fall. Your objective in
the New Year is to keep track of medical expenses so that you know when
you have reached any deductible limits.
You should confirm that your health insurance provider has properly covered
each medical expense. If you do not
have health insurance, then you need to
obtain quotes for coverage, even if you
need high deductible limits to keep it affordable. Also, stay aware of developments regarding the Affordable Health
Care for America Act. If it gets revised
in Congress, it could have implications
for those who obtained coverage under
the Act’s provisions, such as full-time
college students who, under the Act, are
allowed to stay on their parent’s plan
until age 26. If Obamacare stays intact,
there are provisions of the Act that will
be phased in over 2013 that may impact you.
Evaluate your need for other insurance coverage such as
disability insurance or life insurance. Consider how you
would pay your bills if you were unable to work for a period
of time. If you do not have disability insurance, you should
have a larger emergency fund to cover these needs. Life insurance is needed if you have others depending on you for
your income or your care (children or elderly parents, for in-
There is no better time
to track your
spending than when
you can start with a
clean slate at the
beginning of the year.
What is most
important is to track
every penny.
Even if you only keep
track of spending for
• Keep track of your spending. There is
no better time to track your spending
than when you can start with a clean
slate at the beginning of the year. You
can do it on paper, use software like
QuickBooks or an Excel spreadsheet.
What is most important is to track every penny. Even if you only keep track of spending for a
month, it will be an eye-opening experience.
a month, it will be
an eye-opening
experience.
• build a budget. The data you obtain from tracking your
spending can be used to build the budget. Keep in mind that
a budget does not have to be perceived as restricting your
spending. The intent of the budget is to plan ahead so that
you have the funds when you need them.
