Tackle your financial resolutions one month at a time

More often than not, the near-term events on our calendars or smart phones engulf our very existence. Our well-intentioned New Year’s resolutions quickly become a distant, unintelligible voice that doesn’t even crack the rituals of our daily routines. With that in mind, rather than tackle the entire year at once with broad New Year’s resolutions that lack staying power, why not try a more manageable series of monthly financial resolutions to help keep you on track for 2012?

It’s the beginning of a new year, and a great time to map out the plan for the next 12 months. Key goals and milestones should morph from
vague visions to specific written statements. Be definitive in what you want to do and when you want to do it. The distinction between “I wish I didn’t have so much credit-card debt” and “I’ll pay off $1,000 of credit-card debt by April 1” may not seem huge, but being definitive could be the difference between success and failure. This approach also works for savings goals, big-ticket purchases and spending limits, all of which could be part of the plan. Want to increase the odds of sticking to your plan? Automate it. Whether it’s setting up savings and investments or making bill payments, put it on autopilot this month.

Typically, employer pay raises show up this month. Instead of letting the increase seep into your everyday spending, leverage it to support your plan for the year. Bump up what’s going toward debt, increase 401(k) or other employer-plan contributions, or just set up a savings account to build an emergency fund. The time to act is now. A small increase can make a big difference over time. A mere $100 a month
growing at 8 percent per year will result in about $60,000 in 20 years. In the long run, that’s much more meaningful than a couple of dinners out each month.

Spring has sprung, and the financial opportunities are blooming. “Spring forward” by mapping out vacation plans for the summer, and begin setting aside funds for what seems like the distant future: the holidays. Clean up around the house to identify stuff for an upcoming garage sale, to donate to charity or just to remove the clutter. While you’re at it, spring is a great time to inventory personal property. A video/photo record or written inventory could save big headaches in the wake of a catastrophe.

It’s tax time, and a big refund may bring big smiles. However, consider spreading the joy throughout the year by cutting off the interest-free
loan to Uncle Sam by adjusting your tax withhold- ing. The IRS’s withholding calculator at www. irs.gov can be a helpful tool. Don’t be an April fool and miss out on the opportunities provided by an IRA or Roth IRA. Contributions for 2011 are due no later than April 17.

It’s graduation month. Unfortunately, droves of college graduates, saddled with student-loan debt and struggling to find jobs, are being forced to repopulate what was an empty nest. And since this group doesn’t usually impact cash flow in a positive way, be prepared with ground rules and expectations if this is the case in your house. If college is in the future, focus on creating a different outcome. If it’s coming soon, begin the search for potential grants or scholarships sooner rather than later. You could also explore education opportunities like those offered through the military. If college is still far off, this is a
great time to check in on your college funds, or start them.

It’s wedding month, and the reverberations of a big bill may be ringing long after the sound of wedding bells fade. Approach this wedding season with an eye on sending the newlyweds off with a jump-start to their financial union. Instead of a blowout wedding, consider redirecting those funds to a debt overhaul, down payment on a home, or instant emergency fund for the newly- weds. Approach and select wedding gifts with
the same financial savvy. A small memento with a nice check could be just what is needed during these difficult financial times.

July marks the onslaught of hurricane season, and the tornado season is well under way. This month, review homeowner’s insurance with an
eye on replacement cost. Replacement cost should reflect the expenses of rebuilding your home, not necessarily the actual value of your home. Also, ensure that the liability limit on your policy is adequate. A broad rule of thumb is that your liability coverage should be one to two times your net worth. If something goes awry at the Fourth of July party and a lawsuit ensues, liability coverage can help protect against a financial catastrophe.

As students everywhere return to the classroom, it presents an opportunity for all: tax-free shopping. Take advantage of the savings, popular across the country, to restock your closets sans tax. If you’re in the back-to-school mode, start financial lessons early with a budgeting exercise for your kids or grandkids. Give them a set dollar amount, have them create a list, and send them off to shop. Money left over could mean a new video game.

This is National Life Insurance Awareness Month. And while that may sound like a self-serving sales pitch, don’t discount the
importance of periodically assessing your family’s needs. Coverage levels, policy types and benefi- ciary arrangements all deserve scrutiny as you assess your coverage. While you’re at it, use the opportunity to explore all of your insurance: life, health, disability, long-term care, home and auto liability. Every life event, such as marriage, divorce or new children, should be accompanied by a review of insurance coverage.

Traditionally, this is a good time to get a good deal on a new car as dealers make room for next year’s models. Buck the trend and avoid the
pressure. Instead, focus on using that money to eliminate debt and add to savings and investments. No car payment means more money to meet your other financial goals Also, don’t let financial mischief spook you. Check your credit report to ensure accuracy at www.annualcreditreport.com.

The holiday season is upon us. As the family gathers, it’s a great time for frank discus- sions about financial roles, responsibilities and readiness if tragedy strikes. It’s difficult to meet expectations or carry through a loved one’s wishes if they remain a mystery. Consider using a little downtime during the hustle and bustle of the holidays to iron out the planning details in your family. For many employees, this is also the time to update your benefits at work. Review offerings with an eye on gaps in your coverage and ways to positively impact 2013.

To avoid the usual holiday debt hang- over, shop with a list in hand and funds set aside over the course of the year. This is also year-end tax time, so don’t forget required minimum distributions from retirement plans or IRAs, possibly harvesting tax losses from investment portfolios to capture a potential tax deduction, and pumping up contributions to employer retirement- savings plans. Don’t forget about year-end chari- table donations of cash and property. And get ready to start all over again in 2013.

J.J. Montanaro is a certified financial planner with USAA Financial Planning Services, one of the USAA family of companies. USAA is The American Legion’s preferred provider for financial services.

For more financial advice, visit Ask the Financial Expert: www.legion.org/usaa/questions-answers