Financial tasks to tackle in the first month of the year

As the new year begins, it's a good time to get your financial house in order. Here are a few key tasks to focus on in the first month of the year:

1. Set financial goals for the year:

The first month of the year is a great time to reflect on your financial goals and priorities for the coming year. Consider what you want to achieve financially in the short-term and long-term, and make a plan to work towards those goals. This might include saving for a down payment on a home, paying off debt, or building up your emergency fund. Having clear, specific goals can help you stay focused and motivated throughout the year.

Here are a few specific things to consider when setting financial goals:

• Make your goals specific and measurable: To increase the likelihood of achieving your goals, make sure they are specific and measurable. For example, instead of setting a goal to "save more money," set a goal to "save $10,000 for a down payment on a home." This makes your goal more concrete and gives you a specific target to work towards.

• Make your goals achievable: While it's important to aim high with your financial goals, be sure to set goals that are realistic and achievable. If your goal is too ambitious, you may become discouraged and give up. Consider your financial situation, income, and other resources when setting your goals to ensure that they are achievable.

• Make your goals relevant: Choose financial goals that are meaningful and relevant to your life and priorities. This can help you stay motivated and focused on achieving your goals.

• Make your goals time-bound: Setting a deadline for your financial goals can help you stay on track and make progress towards achieving them. For example, you might set a goal to pay off a credit card within the next six months, or save $5,000 for a down payment on a home within the next year.

By setting specific, measurable, achievable, relevant, and time-bound financial goals (using the SMART goal-setting method), you can increase your chances of achieving your financial objectives and improving your financial situation.

2.Review your budget: Take some time to review your budget from the previous year and make any necessary adjustments for the current year. This can help you identify areas where you can cut back on spending and allocate your resources more effectively. Look for areas where you may have overspent, such as dining out or entertainment, and consider ways to reduce those expenses. You may also want to review your income and see if there are opportunities to increase it through a raise, a side hustle, or other means. A budget can be a powerful tool to help you manage your money and achieve your financial goals.

Here are a few specific steps you can take to review and update your budget:

• Gather your financial documents: To create or update your budget, you'll need to know how much money you have coming in and going out. Gather your bank and credit card statements, bills, and other financial documents to get a clear picture of your financial situation.

• Track your spending: Take some time to track your spending to see where your money is going. You can use a budgeting app or spreadsheet to record your income and expenses. Look for areas where you can cut back on spending, such as dining out or subscription services.

• Set financial goals: After you've tracked your spending and identified areas where you can cut back, consider setting financial goals for the year. This might include saving for a down payment on a home, paying off debt, or building up your emergency fund. Having specific goals can help you stay motivated and on track with your budget.

• Create a budget plan: Based on your financial goals and spending habits, create a budget plan that outlines how much money you will allocate towards each category of expenses. Be sure to include a line item for savings and debt repayment in your budget. You can use the 50/30/20 rule as a guide, which suggests allocating 50% of your income towards essential expenses (such as housing, food, and transportation), 30% towards discretionary expenses (such as entertainment and dining out), and 20% towards savings and debt repayment.

By regularly reviewing and updating your budget, you can get a better handle on your financial situation and work towards achieving your financial goals.

3.Review your credit report: It's important to regularly review your credit report to ensure that all the information is accurate and up-to-date. This can help you identify any potential issues that could impact your credit score and take steps to correct them. A high credit score can be beneficial when it comes to borrowing money, getting approved for a credit card, or even renting an apartment. You can request a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once per year.

Here are a few specific things to consider when reviewing your credit report:

• Check for errors: Review your credit report carefully to make sure that all the information is accurate. If you spot any errors, such as accounts that don't belong to you or incorrect payment history, be sure to dispute them as soon as possible. You can dispute errors on your credit report by contacting the credit bureau and providing documentation to support your claim.

• Check your credit utilization: Your credit utilization refers to the amount of credit you are using compared to your credit limit. A high credit utilization can have a negative impact on your credit score. To improve your credit utilization, consider paying off as much of your credit card debt as possible and increasing your credit limit if possible.

• Check for accounts that you no longer use: If you have old accounts on your credit report that you no longer use, consider closing them. This can help improve your credit utilization and potentially boost your credit score.

By regularly reviewing your credit report and taking steps to correct any errors or improve your credit utilization, you can work to improve your credit score and set yourself up for financial success.

4.Rebalance your investment portfolio: If you have investments, consider rebalancing your portfolio to align with your financial goals and risk tolerance. This can help you ensure that your investments are diversified and positioned to achieve your desired returns. Over time, your investments may become more or less balanced than you intended, so it's a good idea to review your portfolio periodically and make adjustments as needed. By rebalancing your portfolio, you can help reduce the risk of your investments becoming too heavily concentrated in any one asset class.

Here are a few specific steps you can take to rebalance your investment portfolio:

• Determine your asset allocation: Your asset allocation refers to the mix of different types of investments in your portfolio, such as stocks, bonds, and cash. A well-balanced portfolio typically includes a mix of asset classes to diversify your risk. Consider your financial goals, risk tolerance, and time horizon when determining your asset allocation.

• Compare your current portfolio to your target allocation: Once you have determined your target asset allocation, compare it to your current portfolio to see if there are any imbalances. For example, if your target allocation is 50% stocks and 50% bonds, but your current portfolio is 60% stocks and 40% bonds, you may need to sell some of your stocks and buy more bonds to get back on track.

• Make adjustments as needed: Once you have identified any imbalances in your portfolio, make adjustments as needed to get back to your target allocation. This might involve selling some of your winning investments and using the proceeds to buy more of your underperforming investments, or vice versa. It's important to keep in mind that investing carries inherent risks, so it's a good idea to consult with a financial advisor or do your own research before making any investment decisions.

By rebalancing your portfolio, you can help ensure that your investments are diversified and aligned with your financial goals and risk tolerance. This can potentially improve your returns over the long term and help you achieve your financial objectives.

5.Review your insurance coverage: Take some time to review your insurance coverage, including your health, life, and property insurance. Make sure that you have the right coverage in place to protect yourself and your assets. If you have experienced any significant life changes (such as getting married, having a baby, or buying a home), you may need to adjust your coverage to reflect your new circumstances. It's a good idea to periodically review your insurance coverage to make sure that you have adequate protection in case of an unexpected event.

Here are a few specific things to consider when reviewing your insurance coverage:

• Health insurance: If you have employer-provided health insurance, you may want to review your plan to see if it still meets your needs. If you are self-employed or don't have employer-provided coverage, you may need to purchase your own health insurance. The Affordable Care Act (ACA) requires most people to have health insurance, so it's important to have coverage in place to avoid potential penalties.

• Life insurance: If you have dependents who rely on your income, it's a good idea to have life insurance to provide financial protection in the event of your death. There are different types of life insurance to choose from, including term life, whole life, and universal life. Consider your financial situation, the amount of coverage you need, and your budget when choosing the right

To conclude, tackling financial tasks in the first month of the year can set you up for financial success throughout the year. By reviewing your credit report, rebalancing your investment portfolio, reviewing your insurance coverage, reviewing your budget, and setting financial goals, you can take control of your financial situation and work towards achieving your financial objectives.