Aside from the yearly reminder sometime before April 15 you need to gather up your financial documents and actually look at them, it’s easy to forget they exist the rest of the year.
One way to keep it at the top of your mind is to schedule a financial date night with your partner. Make it after you’ve filed your taxes; you’ll have a better idea of where your investments stand then, and you’ll be motivated to keep your financial house in order for the rest of the year.
To keep the tax-season momentum going, make a plan about what you need to discuss and analyze regarding your personal finances. Enjoy an evening out over dinner or cocktails to discuss your finances.
Here are some personal finance areas to put on the list:
Your IRA beneficiaries are not covered by a will. You have to name beneficiaries on the designation form. Each year, it’s a good idea to see who is on that form. Did you name the sibling you’re no longer talking to? Did you forget to remove your ex-spouse after the divorce? Did you have kids in the last year and you want them to receive the IRA proceeds? Would you rather support a charity with a portion of the money?
“You can name a charity as the beneficiary of your IRA, regardless of the account size,” said Dan Mathews, CFP in a post for the Certified Financial Planner Board of Standards. Talk to your partner during the date night about who you want to receive your IRA, and make any appropriate changes.
Life insurance protects the living and ensures that your family can survive – and thrive financially — if one of the main providers dies. Life insurance proceeds can be used to pay for housing, school tuition, outstanding debt, household expenses, taxes, funeral costs and childcare.
It’s helpful to analyze your life insurance needs each year, because circumstances can change. Perhaps you’ve moved into a more expensive home or a city with a higher cost of living. Maybe the kids are now in private school. Your income might have increased. All of these affect your family’s financial needs. Talk to your insurance agent about what you should have in life insurance, or check a financial life insurance calculator online.
According to the Social Security Administration, slightly more than one in four Americans who are currently 20 years old will be disabled before they’re 67. Disability insurance provides a portion of your salary should you become unable to work due to illness or an accident. Without disability insurance, could you cover your living expenses if you couldn’t work? Check to see if you have disability insurance through your employer. Find out how much it covers and whether you should supplement it.
The yearly check-in should include a look at your outstanding debts. It’s helpful to know what you owe, whether it’s student loans, mortgage, car loans, credit cards or anything else. How much of your debt are you paying off each year, and is there a way to pay off the loans with the highest interest rates first? Or perhaps you can adjust your budget to cut back on spending, applying that savings to pay off your debt.
If you’ve had your home for a long time, it’s possible that your mortgage rate is higher than it needs to be. See what you’re paying now and what the current rates are for refinancing. You might be able to save money by refinancing to a different, lower-priced mortgage.
A yearly review of your investments will help you understand how your investments are doing and whether you need to rebalance them. Make a spreadsheet to discuss during your date, noting your retirement account balances, investment accounts and available cash. Are your investments diversified? Do you have a good mix of stocks, bonds and cash, depending on your age? Make a plan with your partner about what you need to change in your investment mix in the next year.
Credit report and credit score
Every year, it’s a good idea to look over your credit report and make sure it’s accurate. You can get a free credit report from all three major reporting agencies from AnnualCreditReport.com. It’s helpful to look at your credit score, especially if you’re planning to make a big purchase requiring a loan. This gives you time to make adjustments to improve your credit score.
Going over the finances each year with your partner can be a bonding experience. By making it a date night, you enjoy each other’s company along with some food and drink. Prepare all the paperwork ahead of time to ensure that it will be productive as well, understanding your joint finances and what you can do together to improve your financial future.