Here is an outline of what I typically do every January to kickoff the year. I have been doing some version of this to-do list and process for the last 30 years which has helped to keep me financially grounded and on-track year-over-year.
1. Track Your Asset Balances
Track and review end of year balances of all your asset accounts as of December 31/January 1 – emergency fund, checking, savings, retirement, brokerage - investments, health savings (HSA), college savings, stock plans / employer stock plans, precious metals, etc….You want to capture the value of all of your assets so you can compare your year-over-year progress each year.
2. Debt Review
Review all your consumer debts and the amount you owe (credit cards, lines of credit, vehicles, etc…). Decide for how much debt you will eliminate in 2023. Put together a debt elimination plan for 2023 (debt snowball payoff calculator). Make a commitment to avoid any additional debt in 2023.
3. Net Worth Calculation
4. Portfolio Review
Review and adjust (rebalance) your portfolio and its asset mix to ensure it is in line with your risk tolerance and timeframe for the investments to grow. Also, review the previous year's performance data - growth, income, and expenses, etc...
5. Outline Personal and Financial Goals for the Year
Decide what personal and financial goals you want to achieve in 2023. Write these down and post them to be viewed regularly for the entire year ahead.
6. Double check Retirement Plan Contributions
Verify and update your retirement plan contributions with your employer to ensure you are saving enough for the future. (general guidance to save 15 – 20% of your gross pay toward retirement, depending on your saving rate you are striving for). Always double check the yearly update on contribution limits with the IRS.
7. Pay Q4 2022 Estimated Taxes by January 18, 2023
This only applies to those who are self-employed or retired. You may be required to pay additional estimated taxes for the October – December (Q4) quarter of 2022.
8. Check Your Credit Reports
Always review your credit reports annually to double check them for accuracy. You can pull your credit report for FREE each year via Annual Credit Report.
9. Connect and/or select your CPA
I always check-in with my CPA in January to touch base on estimated taxes, tax planning, and to review any additional preparations that need to be completed for the upcoming tax filing season. If you don’t have a CPA, January is a great time to select one to begin using for the upcoming tax filing.