fbpx

The tax deadline is behind us, and many people are breathing a sigh of relief. But before you put things all financial out of mind and let your paperwork collect dust until next tax season, why not use this time of year as an opportunity to evaluate your entire money situation and make sure your goals are on track with where you want them to be?

Hopefully you still have all the paperwork and financial statements you used to prepare this year’s taxes in one place. This can help you take a step back, review, and update your financial situation, as well as set goals for the year ahead.

So before you put tax season completely in the past, take a look at the following three points that will help you evaluate the overall picture of your financial health:

1. Review Your Estate plan

You may be surprised at the vast amount of people that have outdated estate plans, or no estate plan at all. Are you one of them?

According to a recent survey, just 19 percent of investors evaluate or alter estate plans when reviewing their tax documents for filing, even though it’s an extremely important part of a comprehensive financial plan.

Major life changes, such as a marriage, divorce, death of spouse, or inheritance are all reasons to meet with a financial expert to amend your estate plan. There are dozens of other life changes that can also affect your plan, so if you’re unsure of whether yours needs an update, don’t hesitate to contact a trusted professional.

2. Update Your Charitable Giving Goals

Are you making more money or do you have fewer monthly expenses than last year? If so, then you may consider increasing your donations this year in order to reduce your tax obligation.

Charitable giving is often a win-win for those that can afford to do so, since one can often write off the expenses as tax deductible while assisting others in need. Check out this previous blog I wrote on charitable giving for more tips.

Second, look more closely at your charitable giving plan to see if you should increase your donations to reduce your tax burden.

3. Evaluate your retirement savings plan

While you already have all your financial paperwork at your fingertips, use it as an opportunity to check and see if you’re on track toward your retirement goals. Make sure you evaluate whether you are contributing enough to receive the maximum benefit if you have an IRA or 401(k). For 2016, contribution limits for a 401(k) are $18,000, while IRA limits are $5,500, or $6,500 for those over age 50.

The bottom line: While many people are on the right track when it comes to their financial plan, there is always room for improvement. According to the previously mentioned financial survey, nearly half of people use tax season to step back and think about their overall financial plan, while the other half do not.

Using tax season as an opportunity to review your financial plan could have many positive benefits, such as helping you become more engaged in making investing decisions and causing you to be more confident in your ability to reach your goals. Spend a little more time on reviewing your money situation today and you’ll thank yourself later for improving your financial future.

Author Ron L. Brown, CFP®

Ron is a CERTIFIED FINANCIAL PLANNER™ and president of R.L. Brown Wealth Management. He specializes in retirement, estate, and business planning for professionals and entrepreneurs. Ron assists his clients with creating a financial plan to ensure they are able to live their ideal lifestyle during retirement and leave a strong legacy for their family. Ron has been featured in The Wall Street Journal, US News, Yahoo Finance, Investopedia, and numerous other high profile financial publications.

More posts by Ron L. Brown, CFP®

Leave a Reply