9 Things Your Financial To-Do-List Should Include

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Managing your finances can feel like another full-time job, and for some, assisting people with their finances is their full-time job!

While there are things you should be doing more often than others (like monitoring your monthly budget and making sure to pay all of your bills), others may only roll around once a year (like filing your taxes).

But as your life continues to get busier, some of those once-a-year personal finance "to do's" may fall by the wayside. To help keep your finances on track, we've compiled an annual to-do list for all of those activities that are best tackled early in every new year. So, like spring cleaning, let's make the early months of every year the personal finance planning season. Here are the nine things that should be on everyone's financial to-do list.

1. File Your FAFSA (Student Financial Aid Application)

Whether you're a student yourself or the parent of one, filing your annual FAFSA early is critical to getting the best financial aid package for yourself or your dependent student in the coming school year. Some of the information required will be taken from the previous year's tax returns, so this may be the push you need to get a head start on your taxes, too.

2. Do Your Income Taxes

You know that you'll have to do taxes. You'll have to prepare your state tax return, and even though you have until April 15 (or later if you file for an extension), you might as well get a head start. Doing your taxes is no fun, but having all the resources you need in one place will make the task easier. Giving yourself enough time also gives you the benefit of having time to check and double-check, making sure that you're getting every deduction and tax credit available to you.

In 2021, the IRS extended several tax filing and payment deadlines. Individual tax returns were due May 17 instead of April 15. And those affected by winter storms in Texas and neighboring states are allowed to delay filing their income taxes and making payments until June 15.

3. Do Your Annual Financial Checkup

Before you can make goals for the new year, you need to assess where you stand right now. Conduct an annual financial checkup. Have you been meeting your financial goals from last year? What new developments have come up in your finances since last year? This is probably a good time to check your credit score. You are legally entitled to one free credit report every year (and you can purchase them more often, as necessary).

4. Calculate Your Debt-to-Income Ratio

Your financial situation can change drastically throughout a year, so calculating your debt-to -income ratio will tell you whether there's a red flag in your finances. It's also a good lead-in exercise for calculating your net worth.

5. Calculate Your Net Worth

Your annual financial checkup should include an updated net worth statement. In fact, ideally you would calculate your net worth quarterly to keep track of progress. But at the very least, you should calculate your net worth at the beginning of each year as a way to monitor financial progress in an objective way. Your net worth will also help you to set your goals for the year, which is the next to-do on our list.

6. Set New Financial Goals

To stay motivated toward reaching your short-term and long-term financial goals, you should review them at the start of each year and make any changes. Did you meet one of your goals last year? Do you need to reassess priority on your existing goals?

7. Set Up Your Budget for the New Year

Situations change throughout a year, and a new budget to go along with your new goals will keep you on the right track. Do this after you've established your financial goals.

8. Bone Up on How This Year's Tax Law Changes Will Affect You

You don't have to be a tax guru, but having an idea of new changes in the tax laws will help you ensure that you don't pay any more taxes than necessary. For instance, have the limits on IRA contributions been raised?

9. Adjust Your Income Tax Withholding

If your situation has changed (for example, if you got married or divorced, had a child, lost a dependent, bought a house, had a big change in income, owed taxes last year, or got a large refund), you should redo your W-4. If you have changes to make to your W-4 concerning filing status or the number of dependents, you might also want to take the opportunity to review and update your beneficiaries and your will

The Annual Financial To-Do-List Bottom Line

You certainly don't have to complete these to-do's all at once in the first week of the new year, but tackling a few each week will have you in good shape quickly, and you'll feel more in control of your financial situation.

Article Sources

  1. Internal Revenue Service. "2021 Tax Filing Season Begins Feb. 12; IRS Outlines Steps to Speed Refunds During Pandemic." Accessed June 1, 2021.

  2. Internal Revenue Service. "Tax Day for Individuals Extended To May 17: Treasury, IRS Extend Filing and Payment Deadline." Accessed June 1, 2021.

  3. Internal Revenue Service. "Victims of Texas Winter Storms Get Deadline Extensions and Other Tax Relief." Accessed June 1, 2021.

  4. Federal Trade Commission. "Get My Free Credit Report." Accessed June 1, 2021.