If you’re like most people, New Year’s resolutions are usually a source of endless disappointment. We start the year with grand ideas that often melt away before the end of winter. One of the biggest reasons for this is the tendency to try to do too many big changes at once, which causes us to burn out and get nothing done at all. That’s because we tend to overestimate what we can accomplish in the short run and underestimate what we can accomplish in the long run. To break things down, here are some ideas for each month to improve your financial situation in 2013:
Jan: Set up a system to track and manage your expenses, either online with a program like Mint or Yodlee (they also have mobile apps) or manually using a worksheet like this. By starting right away, you’ll be able to capture a whole year’s of expenses.
Feb: Check your insurance coverage to make sure that you’re adequately covered and shop around to see if you can get the same coverage for less somewhere else. What better way to celebrate Valentine’s day then to let your loved one know that they’re taken care of in case something were to happen to you?
March: As part of your spring cleaning, verify that your beneficiary designations and estate planning documents are up to date.
April: When filing your taxes, make sure you’re taking advantage of any tax breaks you’re entitled to and don’t forget that you have until April 15th to make a 2011 contribution to an IRA.
May: Protect your credit by ordering copies of your credit report from each credit bureau at annualcreditreport.com to check them for errors, putting a security freeze on each of your credit reports to prevent unauthorized credit checks, and signing up for free credit monitoring on a site like Credit Karma.
June: Take a risk tolerance questionnaire and adjust or re-balance your investment portfolio to match the suggested asset allocation guidelines. Also, look for lower cost investment options for each part of your asset allocation.
July: With vacations on your mind, set up automatic deposit into your savings account to pay for your next one along with emergencies and other non-monthly expenses like holidays and certain taxes and insurance premiums.
Aug: Create a plan to pay off all your high interest debts by making extra payments on your highest interest balances. If you’re having trouble meeting even the minimum payments, consider credit counseling. No high-interest debt? Reward yourself with a summer month free of financial concerns.
Sep: Annual enrollment is a great time to run a retirement calculator and increase your retirement plan contributions if needed.
Oct: If you have minor children or grandchildren and extra assets or savings, consider gifting them highly appreciated assets or contributing to a tax-advantaged education account like a 529 plan or Coverdell ESA. After thinking about college costs, nothing will scare you on Halloween.
Nov: As you begin your holiday shopping, review your other expenses and look for ways to cut back. If you have a health care FSA, schedule appointments with your doctor and/or optician to use any money in the account before you lose it at the end of the year.
Dec: Sell investment losses in taxable accounts and wait at least 30 days to repurchase them so you can write the losses off your taxes next year.
Even if you only finish a few of these things, it will probably be more than most people accomplish this year. For the rest, there’s always 2014…