Personal Financial Plan - Fourth Quarter

Managing your personal finances is an ongoing process that requires discipline.  Most people are successful at making sure the bills get paid and often save a little on a regular basis.  However, managing your finances effectively is more than just handling the daily or monthly tasks. 

Below is a monthly calendar for October through December that can serve as a guide to addressing some of these other issues.  The suggestions on this outline may not match your personal financial timeline, but they can serve as a reminder to make sure you address these key considerations when it’s right for you. 

October

Review your charitable deductions for the year

• Americans continue to be generous givers to their favorite causes.  Contributions can provide personal satisfaction and tax savings.
• If you itemize your tax deductions, you can deduct cash contributions up to 50% of your adjusted gross income.
• Consider giving appreciated stock that you have held for more than a year if you wish to make a large contribution to your favorite cause. 

If you are self-employed, make sure your retirement plan is up to date and fits your needs

• The simplest retirement planning tool is an IRA.  You can contribute up to $7,000 for 2024 or up to $8,000 if you are age 50 or above.
• SEP IRAs are simple to establish and allow contributions up to 25% of compensation with a maximum or $69,000 for 2024. 

November 

Review the details of your employer’s retirement plan and make sure you are taking full advantage of it

• Participate in the plan.  Even minimal participation makes sense.
• Contribute as much as you can. The annual limit for employee contributions for 2024 is $23,000 with an additional $7,500 allowed if you are age 50 or older. Determine what you can afford and make the largest contribution you can.
• Get the entire employer's match.  Review your plan to understand how the employer's contributions are made and allocated.  Discussions with your human resources department may be helpful.
• Use a sensible investment strategy. Choose a combination of investment options that match your time horizon and risk tolerance. Generally, longer time horizons and greater risk tolerance point to a more aggressive investment strategy with greater use of equity investment choices. 

Review any insurance offered by your employer to make sure you have made choices appropriate for your situation

• Everyone should have health insurance and getting it through you employer is probably cheaper than buying it on your own.
• The choice of health insurance options should be based on how you want to use the insurance and how much you can afford.  If you view insurance as simply protection against very large medical expenses, choosing a higher deductible will probably result in lower premium.
• Many employers offer short-term and long-term disability insurance coverage.  Again, because this insurance is available as part of a group, the costs are usually lower than what you would spend on your own. 

December 

Discuss your finances with your family

Many find it difficult to discuss financial issues with family members, but there are benefits for everyone by doing so.

• Preparing for a family financial discussion will force you to organize your thinking about your short term and long term financial plans.
• Keeping family members informed can reduce stress and anxiety if something unfortunate happens.
• You may learn something from them in the discussion. 

Review your investment portfolio and your investment results for the year

• Be sure your asset allocation (equities, fixed income, and cash) matches your time horizon and risk tolerance.  Longer time horizons and greater risk tolerance usually point toward a higher allocation to equities.
• Many investors end up with a portfolio consisting of many stocks.  Use this opportunity to review each position to make sure you still want to own it.
• If your long-term investment results are poor, consider alternative avenues like mutual funds, index funds, or changing your advisor.
• If you have realized capital gains and unrealized capital losses, consider selling stocks held at a loss to offset earlier gains. 

Spend a little time reflecting on your financial situation and your goals

• Evaluate how well you are doing in reaching your goals.
• Create your financial resolutions for the next year and write them down.