Year-Beginning Planning

If you’ve ever doubted that we’re a nation of procrastinators, try taking a look at the number of articles that come up under “year-end financial planning.”  You’ll find a whole plethora of ways to cram things in at the last minute.  In fact, if you search the internet for “beginning of year financial planning,” most search engines suggest that what you really meant by ‘beginning’ was ‘end’ and they then provide you the same list of articles.  Really!  Try it.

Most of you know that I’m not a fan of the beaten path, and in that spirit, here are some ideas for things you can do at the beginning of the year to help pave the path to success.

Make your 4th quarter estimated tax payment

For small business owners, freelancers and the self-employed whose fiscal year starts on January 1, the estimated tax payment for last year is due on January 15 of this year.  If you file your 1040 for 2015 before February 1, 2016, you don’t have to make a January payment1, but who’s ready before February 1?  Refer to the earlier comment regarding procrastination.

This is also a great time to set up calendar reminders to make the estimated payments for this year.  Repeat after me: “Siri, on April 8th, remind me that my quarterly estimated tax payment is due next week.”  Now do the same thing for the payments on the 15th of June, September and next January.

Double-check your retirement account contributions

Probably the most ubiquitous of year-end advice is to max out your Individual Retirement Account (IRA) or your 401(k) Retirement Savings Plan.  What’s always bothered me about that advice is that readers are being asked to set aside money for retirement at what is probably their highest spending portion of the year.  Holiday travel, events and gifts in the immediate future are going to carry a disproportionate weight in the decision about how much we can afford to put away for a retirement that may be decades away.

This year, try a different approach.  Now that you have all of that holiday hullabaloo behind you, think about what you can put away and adjust your 401(k) contribution or IRA direct deposit so that you end up putting away that extra couple of thousand dollars a chunk at a time, instead of all at once.  If you got a raise last year, consider bumping up the percentage of your pay that’s saved.  While leaving the percentage the same will result in saving more than you did last year, increasing the percentage can leverage that raise and still leave you with extra non-qualified spending money.

Financial Spring Cleaning

Starting the year off with a new level of organization can provide clarity around your finances and the ability to see opportunities you may have missed.  There are small accomplishments that can be made in almost every area of your financial life:

  • Banks – Consolidate some of those old accounts!  I’m willing to bet that for every one of you that intentionally has multiple accounts (each earmarked for a specific goal of course), there are two of us who are just too lazy to go through closing a bank account when we move or combine finances with a partner.  Keeping your money spread out across multiple institutions makes it harder to keep an eye on fees and understand your complete financial picture.
  • Credit – Time to take a look at your annual credit report.  Swing on over to and check your report from the three major credit bureaus for free.  This is also a great time to see what else is out there when it comes to cards.  That travel card you got years ago was great when you were globetrotting, but now that things have slowed down a bit, it may make sense to earn cash back or some other perk.  Your mileage may vary.  Check out this post at by Nick Clements to get yourself started.
  • Estate Planning – If you don’t have a will and ancillary documents1, time to get one. Clients and friends who haven’t worked with attorneys on other matters often ask me if they can’t just do it themselves online.  In my opinion, it’s the same as financial planning: while there are numerous resources available on the internet that would allow a well-read individual to do it themselves, it’s been my experience that money paid to the right professional tends to return dividends.  If you do have a will, but you haven’t looked at it in three to five years, it’s time for a review.
  • Insurance – Shop your rates.  One of the reasons that insurance companies adjust rates is to balance the types of risk on their books.  For example, one car insurance company may find that it has an inordinate number of teenage drivers in Massachusetts on its books.  You can bet that the rates for older drivers in other states will become more competitive to attract a different risk pool.  That’s a simple example, but the point is that what may have been the most affordable for you when you bought it is no longer.  Work with an insurance agent to shop different companies, but be sure to look at more than just the premium.  Not all policies are created equally, so compare apples to apples.

I wish I had _________ last year.

Take a minute to look back on last year.  What do you wish you had done, been or had? Now is the time for action if you want to make it happen this year.  An ounce of intentionality can go a long way.  New year’s resolutions catch a lot of flak, and for good reason.  Most of us drop the ball before the end of January.  Once you’ve figured out what you want this year, write it down and then share it with someone.  Which brings me to…

Find an advisor, or at least a mentor.

One of the reasons most of those bygone resolutions are lying by the proverbial roadside is because you probably tried to do it all yourself.  There is no reason that this year can’t be financially better than last year.  Consider looking for a professional to help you make that happen.  If you’re still not ready for that, then at least look around you for someone who has what you’re after. Share your goal for the year with them, and ask them if they’d be willing to mentor you on achieving it.


1Ancillary documents generally refers to durable power of attorney, medical power of attorney with HIPAA language, directive to physicians (living will) and guardianship instructions for minors.  I don’t give legal advice, so check with your favorite attorney or ask me to point you to one for questions.
Year-Beginning Planning

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