Wednesday, December 27, 2000
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Wednesday, December 27, 2000 |
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Improving your personal finances for the new year Another year, another set of New Year's resolutions. If improving your personal finances is among your resolutions for 2001, the Georgia Society of CPAs recommends that you break down your goal into manageable tasks. Just like resolving to lose 25 pounds doesn't mean you do it all in January, achieving financial fitness requires a month-by-month plan. January - Pay down your debt If you've run up large credit card bills during the holiday season, your first financial resolution for 2001 should focus on paying down your debt. Review the interest rate and terms on outstanding loans and credit cards to identify opportunities to restructure debt at more favorable terms. Then, work out a realistic repayment plan and stick to it. February - Set long-term financial goals and save for them Whether establishing a college fund for your children or planning the vacation of a lifetime, concrete objectives form a solid foundation for achieving your goals. Prioritize your list of goals and assign your top goals a dollar value and a target date. Use an online calculator to determine how much you need to save each month to achieve your goals and devise a specific plan for doing so. March - Get ready to file your taxes To avoid last-minute income tax-filing panic, begin gathering tax-related receipts and documents now, and make an appointment with your CPA or a tax adviser to help minimize your tax liability. April - Fund your retirement April is a great time to think about the tax benefits of retirement plans. You can make your Individual Retirement Account contribution for 2000 by April 15 and those who qualify can claim a deduction on their 2000 return. Qualification for the deduction depends on the adjusted gross income of you and your spouse, if married, and whether or not your company offers a retirement savings plan. If your company has a retirement savings plan and -more- 2 you're not a participant, sign up now, so you can start to benefit from tax-deferred savings. May - Automate your savings Now that Uncle Sam has been taken care of, it's time to pay yourself in savings that is. When you sign up with an automatic savings plan through your payroll department, the dollar amount you choose is deducted from your paycheck and sent to the mutual fund or other investment destination of your choice. If your employer doesn't offer this service, you can usually arrange for your bank to make automatic deposits to your investment account. June - Learn more about personal finance June is a great month to sit in the sun and read books and magazines about personal finance. If you stick to reputable sources, you can also find excellent financial advice sites on the Internet. July - Review your investment portfolio It's mid-year and an opportune time to check on your asset allocation. Changes in the performance of your investments could mean you need to rebalance your investments in line with your goals and tolerance for risk. August - Check insurance coverage Check out your home, health, car, life, and disability policies to determine whether there are any gaps in coverage. Talk to your agent to see if you may be able to obtain more effective coverage by increasing or reducing deductible amounts on your policy. Also inquire about any discounts that may be available for taking special safety precautions such as adding an alarm system to your home or car. September - Get organized Back to school time is an excellent time to organize important financial papers and legal documents. Also consider investing in computer financial software that can help you keep track of your finances and monitor your progress. October - Prepare or strengthen your estate plan An estate plan should include a will. It's also important to consider a durable power of attorney, a living will, and any living or irrevocable trusts. You should also review how your property is titled and what measures you can take to minimize estate taxes and probate costs. November - Take advantage of year-end tax savings strategies Make charitable contributions. Consider whether it makes sense to offset capital gains with capital losses. Plan now to delay income and accelerate deductions. Check on your flexible spending accounts at work and make plans to spend unused funds. December - Calculate your net worth Add up all your assets (what you own) and subtract the total of your liabilities (what you owe) to determine your net worth. By doing this each year, you can chart your progress and watch your assets grow. A CPA can provide you with additional guidance for making your way through 2001 the year you achieve your resolution to improve your financial fitness. The GSCPA is the premier professional organization for CPAs in the state of Georgia. With over 10,000 members throughout the state, the purpose of the GSCPA is to promote the study of accountancy and applicable laws, provide continuing professional education, maintain high ethical and work standards, and provide information about accounting issues to the membership and the public. For more information, access our web site at www.gscpa.org.
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