The Never-Ending Game of PF

Personal Finance aka PF is a never-ending game.

As the dust settles from tax season, it's a prime opportunity to conduct a thorough assessment of your financial well-being. Just as you wouldn't skip an annual checkup with your doctor or neglect a dental visit, it's crucial to give your finances the attention they deserve. This realization struck me during a recent conversation with a client, prompting me to think a bit deeper about the components of a financial health review.

Let's break down a few key areas to scrutinize - these are my 10 basics:

1. Tax Withholdings: Were you surprised that you owed a heap of tax to the government or did you receive a much larger income tax refund than you thought? Take a close look at your current tax withholdings. Are they aligned with your tax liabilities, or do they need adjustment? Failure to recalibrate could result in unexpected tax bills or penalties. According to recent IRS data, approximately 21% of taxpayers owed additional taxes in 2020, highlighting the importance of accurate withholdings.

2. Retirement Contributions: Are you maximizing contributions to your company-sponsored retirement plan? Many think they do, but do not. You may be missing out on tax savings, company matches, and the ability to save more. A staggering 43% of workers aren't saving enough for retirement, according to a survey by the Employee Benefit Research Institute. Boosting contributions now can significantly impact your financial security in the future.

3. Budget Tracking: Keep tabs on your cash inflows and outflows to ensure you're not squandering money unnecessarily. Studies show that households waste an average of $1,300 annually on avoidable expenses, underscoring the importance of prudent budget management. How much do you spend for coffee?

4. Portfolio Review: With various sectors experiencing significant market gains, it's prudent to review your investment portfolio. You may have valuable gains to take off the table and reposition, or you may have sustained losses thant can help for taxes or rebalancing. A recent analysis found that nearly 40% of investors hadn't rebalanced their portfolios in over a year, potentially exposing them to undue risk. This is not simply automate and leave it be. Review where you are and course adjust.

5. Insurance Coverage: While not the most exciting aspect of personal financial planning, insurance is a critical safeguard against unforeseen events. Evaluate your coverage for auto, homeowners, umbrella, life, disability, and long-term care insurance to ensure adequacy and cost-effectiveness. This is not a set-it-and-forget area to review. Costs increase, policies become outdated and life changes.?

6. Social Security Benefits: Requesting your latest statement of benefits from the Social Security Administration is a prudent move. Errors in benefit calculations are not uncommon, affecting an estimated 10% of beneficiaries, according to a report by the Center on Budget and Policy Priorities. An account be established online at ssa.gov

7. Estate Planning Documents: Reviewing wills, trusts, and health care proxies is essential for ensuring your wishes are documented and legally enforceable. Surprisingly, over 60% of American adults don't have a will, according to a survey conducted by Caring.com.

8. Emergency Fund: Do you have sufficient liquidity or an emergency fund to weather unexpected financial storms? Loss of a job, hurricane or tornado damage, or unexpected expenses. Unfortunately, a recent survey found that 46% of Americans would struggle to cover a $400 emergency expense without borrowing or selling assets.

9. Charitable Giving: Incorporating charitable giving into your financial plan not only benefits worthy causes but can also have tax advantages. By strategically allocating funds to charitable organizations, you can make a positive impact on your community while potentially reducing your tax burden. If you are donating to philanthropic causes are you aware of the different ways one may donate and are you choosing the best assets to donate?

10. Advisor Meetings: Lastly, when was the last time you convened with all your financial advisors? It's not uncommon for uber-high net-worth families to corral all their advisors to review the family finances together. Regular collaboration ensures alignment and maximizes the effectiveness of your financial strategy.

Let's keep this relatively simple. There's no time like the present to conduct a comprehensive review of your finances. It does not have to be elaborate. By addressing these key areas proactively, you can strengthen your financial foundation and enhance your long-term prosperity.

Wishing you joyous evaluation moments.

Jonathan Gassman

Disclaimer: Remember to seek guidance from qualified advisors. The information provided is for informational and educational purposes only.