Five Smart Actions for the New Year: Financial Checklist

The new year is a great time to reflect, revisit priorities and take actions — big and small — to help you stay on track to reach your financial goals.

As you consider your financial situation for 2024, we are here to help identify strategies that can keep you focused and moving forward.

Here are five smart actions to consider:

1. Evaluate any changes to your financial situation

Your financial situation can change a lot in a year. Maybe you are pursuing an exciting new financial goal, such as renovating a home or early retirement. Or perhaps you are dealing with more subtle lifestyle shifts that affect your cash flow, such as workplace benefit changes, the phasing out of childcare expenses or new car loan payments. Whatever changes you are experiencing — positive or negative — please connect with us about your situation. We’ll offer personalized recommendations and help identify savings opportunities to keep you on track to achieve your financial goals considering your current situation.

2. Review your investment portfolio

2023 was an eventful year in the markets, with both upward and downward movements. As such, your investment portfolio may have evolved to a different risk profile. Depending on your goals, this may mean you have too many stocks and too few bonds (or vice versa). Consider connecting with me to review your investments — we may recommend small adjustments to your asset allocation, or a rebalance to bring your portfolio back in line with your risk tolerance. In addition, you may want to take the opportunity to reconfirm or revisit your risk tolerance. “In 2023, inflation moderated considerably, economic growth was much stronger than anticipated, and by the end of the year, the Federal Reserve had paused its aggressive interest rate hikes,” said Ameriprise Chief Market Strategist Anthony Saglimbene. “While major U.S. stock benchmarks saw a solid year of gains, returns were concentrated across a handful of mega-cap technology stocks. At the same time, bond prices faced another challenging year as interest rates moved higher. However, we see opportunities forming for both stocks and bonds in 2024, particularly if the U.S. economy avoids a recession. Now may be an opportune time to meet with your financial advisor to discuss ways to boost portfolio income, explore investment opportunities and rebalance your portfolio.”

3. Confirm your beneficiary designations

A beneficiary is a person or entity, such as a trust or nonprofit, that you have designated to receive the assets in your financial accounts when you die. They’re incredibly important because they override instructions in your will and allow your assets to pass directly to the beneficiaries without having to go through probate.

As such, all financial accounts (regardless of size) should have specific beneficiaries named — and the beginning of the year can be a convenient time to review and update them. For help, consider reaching out to us. We will help you review your beneficiary designations on a regular basis and after major life changes such as a birth, divorce or marriage.

4. Assess your cash reserve

When a financial emergency arises, a cash reserve can help you pay for it and stay on track with your financial goals. Strive to keep three to six months of living expenses in a safe, liquid cash account that is generating interest. A high-interest savings account, money market deposit account or short-term certificate of deposit are good options to consider.

Because your cash reserve is the first line of protection against a financial setback, consider reviewing it annually to make sure it fits your current needs. If you used some of your cash reserve recently or your circumstances have changed — higher expenses with a new child or a new job, for example — it’s worthwhile to replenish it. Similarly, ensure your reserve is keeping pace with inflation by keeping it in an account that earns interest.

5. Start planning for 2023 and 2024 taxes

As the April 15 deadline for filing 2023 federal tax returns draws closer, you will begin receiving tax documents from employers and other institutions. Whether you file yourself or work with a tax professional, consider organizing these materials earlier in the season to prepare for a tax refund or tax payment.

Additionally, it’s not too early to start thinking about your 2024 return and how a year-round tax strategy can help lower your tax burden. For example, if you’re planning to itemize for 2024, think about how you can maximize your deductions or take advantage of certain tax credits throughout the year. The sooner you start planning, the more flexibility you’ll have to pursue tax strategies that could potentially benefit you.