Throughout the year life gets crazy. We have to take care of work, family, kids, church, sports, and the list goes on. Because of all of that, our financial life gets put on the back burner. But it’s a new year with new beginnings—the perfect time to do a little financial housekeeping. Taking time to do a financial checkup now, will not only set you up for success throughout the year but it will also catch things that may cause problems later. And we know what problems really mean—spending money you hadn’t planned to.
Beneficiary Updates
To begin your financial checkup, start with reviewing all of your beneficiary designations. These are the people you select to receive the proceeds of your accounts in the event of your death. The accountants can be your IRAs, SGLI, retirement accounts, and other life insurance policies. Whenever you have a life change, it’s wise to review your beneficiary. Accounts with beneficiary designations supersede what you’ve written in your will. Which means the person you pick will ultimately receive the money regardless of what the will says. If you recently changed jobs and rolled over a 401(k), double-check it because the beneficiary designation does not stay the same.Budget Review
When it comes to your financial life, a budget is always the best place to start. Modify any new expenses in your budget for the new year or changes to existing ones. Update your income for the new year as well. The military can find the 2020 Pay Charts here. As a result of making changes, you’ll begin your year smoothly with an accurate budget.Estate Planning Documents
The beginning of the year is the perfect time to evaluate your estate planning documents. Military members preparing for deployments may want to look into updating their powers of attorney. If you’ve had children or divorced this year, you’ll want to update your will ASAP. Also, reevaluate who you have chosen as a guardian of your kids. If you want to change the person/s, it’s another reason to update your will. Don’t know what documents you need? I’ve got you covered, here.Tax Exemptions
January’s the time to make adjustments to the number of exemptions you claim on your W-4. Are you having too much withheld from your check and therefore receiving a significant tax return? If so, you’ll want to reduce the number of exemptions your claim. It’s better to have the extra money each month to save and invest than to give the government an interest-free loan all year! If you know your income is going to be considerably higher this year, look at increasing the number of exemptions you claim to avoid owing taxes at the end of the year. The IRS has an excellent resource to calculate the number of exemptions you should be claiming. For my military peeps, you can access the IRS withholding calculator through MyPay or anyone can access it here.
Pay statements/LES
In case you aren’t checking your Leave and Earnings Statement (LES) and/or pay statement each month (you should be), now’s the time to do it. Look for incorrect information such as the wrong pay date or years of service. Also, check that you weren’t overpaid. If you’re in the military, you’ve heard of DFAS accidentally overpaying someone. They’re going to take that money back ASAP, and it’s probably going to be at the most financially inconvenient time for you! To catch problems early, you should review your LES and pay stubs every month. It’s all fun and games until your paycheck is short $1,000.Retirement Plans
Will your income increase this year? If yes, you can add more money to your retirement savings. Check how much you’re currently contributing to your TSP, 401(k), or IRA and make adjustments to save more. Depending on your employer’s plan, you usually can make changes through your employer’s 401(k) plan administrator’s website. Make adjustments to your IRA through the website of the institution. Make TSP contribution changes through your MyPay account.Insurance Coverage
And next on the checkup is an insurance review. Probably isn’t at the top of your list of things to do but still an important part of a financial checkup. The goal’s to review your levels of insurance to ensure you have adequate coverage. Based on your review, get more or less depending on your needs. If you don’t know what your needs are, here are some resources to help.Life Insurance
Auto Insurance
Renters Insurance
