The Tenth Philosophy: TMF Personal Finance Calendar

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Everyone needs a plan.  That’s what the Ten Philosophical Principles of a Moderately Frugal Life have been about.  You can view them as rules, guidelines, or as starters for rational conversation.  Either way, the Ten Philosophies of a Moderately Frugal Life are there to serve as a map to help you on your course to financial independence.  Speaking of a map, there is one more important aspect of making a solid plan, making sure you aren’t missing pieces!  Here is The Moderately Frugal (TMF) Personal Finance Calendar to help you stay up on things as the year goes on!  I’ll break it up into the calendar year (things that are best done in a certain month or easier to remember then) and into timelines (how often something should be done).

[Important Note:  I am, for the most part, a firm advocate in “set it and forget it” investing in low-cost index funds.  You will note that I do not encourage you to check your portfolio every month.  In fact, I discourage that.  Set up a solid plan, and leave it to work its magic!]

The Moderately Frugal Personal Finance Calendar

First Quarter

January:

Wildlife Calendar
If you need to use a real calendar to write this all down, my kids liked this one.
  • January is the perfect month to perform your Backdoor Roth Conversion!  If you haven’t made one before, please check out my Step by Step guide and also how you can (possibly) put $22,000 into a backdoor Roth in one year (if it’s your first ever).
  • Make sure that you have changed your retirement account contributions at work, if necessary (increase it to $18,500 for year in 2018 yet? Over age 50 this year and can contribute to catch-up limit of $24,500?)
  • If you pay quarterly estimated federal income tax payments, the 1st quarter’s bill is due.

February:

  • A great month to do your taxes!  By this point, you should have all of your W-2’s, 1099s, K-1s, etc. If you are like me and have an 8606 to file (Backdoor Roth) the IRS may not let you file til partly through the month.  That was true at least for 2018.  If you mis-calculated your taxes and get a refund, this gives you a head start on being able to take advantage of that compounding interest by investing into the market.  Make sure to change your exemptions thereafter so that you don’t give a giant interest-free loan to the government next year.

March

  • If you are doing quarterly Net Worth updates (highly encouraged!), March should be your first month.  I do mine a month later because I get quarterly bonuses for over time the month after each quarter ends.  Personal Capital is the best tool I’ve found to follow your Net Worth.  It helps provide motivation to continue on your current course or to make a change!
  • This is the time to review federal financial aid if you have a college student or a high school student in their senior year.

Second Quarter

April

  • April is an important month.  This is the last month you can contribute to an IRA for the prior tax year.  [You, of course, can contribute to the current year anytime during the calendar year].  That’s how I contributed $22,000 in one year to a Roth IRA.
  • This is also the last month you can fund a Health Savings Account (HSA) if that is available to you.
  • If you pay quarterly estimated federal income tax payments, the 2nd quarter’s bill is due.

May  

  • May is when Equifax got hacked and millions of people’s personal information was exposed.  If you haven’t taken steps to protect yourself from this, May is the month.  Chief Mom Officer writes a great post on protecting your credit (and more posts on protecting your kid’s credit).  Sage advice, really.

June  

  • I encourage you to do quarterly Net Worth updates, but at the very minimum you should perform this function twice each year.  June is as good of a month as any to perform this review.  Make sure you are on course to reach your financial goals.  By what date will your debts be paid off?  When will you get to zero net worth (its a big deal for those of us starting with debt!)?  Your first $100,000?  First Million?  Be as specific as possible.
  • Make a Financial Manifesto to help you get there.  For a full financial plan, you can always use WCI’s “Fire Your Financial Advisor” Course. 
  • If you are feeling the stress from finances, use The 30% Rule to see what’s going on.
  • Cut off date at end of month for financial aid applications for college students.

Half-Way Point (Start of Third Quarter)

July:  

  • If you work in medicine and received a bonus this year, now is a good time to apply The 10% Rule.  (Take 10% of your bonus and enjoy it.  Put the other 90% towards destroying debt or investing).
  • This is a good time of year to check to see how much taxes have been taken out of your paycheck.  Are you over-funding your tax bill and giving the government an interest free loan?  Make sure to add more exemptions.  Are you underfunding and heading towards a a penalty?
  • Accidental FIRE writes a great post on the topic of an interest free governmental loan!
  • If you pay quarterly estimated federal income tax payments, the 3rd quarter’s bill is due.

August

  • Use August to make sure that you are keeping up with your financial education!  This is essential to your success as a DIY Investor.
  • Read one to two books per year and keep up with a website or two each week (takes 5-10 minutes)!

September 

  • Take September to make sure your asset classes are how you would like them to be.  For example, say that you are aiming for a 40% large cap, 20% mid cap, 20% small cap, and 20% international.  If any of these are off by > 5% it may be worth making sure that either future investments are diverted into the other funds that are lower than they ought to be.  If your nest egg is sizable this may not get the trick done, and assets may have to be moved from one asset class to another.  Doing this within a retirement account is, of course, much more tax efficient than moving money in a taxable account.
  • Have you gone 5 years without considering what your stock/bond ratio?  If so, this may be a good time to consider that as well while you look at asset allocation.

Fourth Quarter!  

Shawshank Redemption
Every good story involves a plan. (And if you haven’t seen this movie, I am more concerned about your taste in movies than your finances)

October 

  • If you filed an extension on your taxes, this month is now the new “taxes are due” month.
  • October-November is the typical open enrollment month for most employers.  This is the time to change your insurance coverage, get a flexible spending account (child care), opt in or out for dental/eye insurance, change your life insurance coverage, etc.
  • If you pay quarterly estimated federal income tax payments, the 4th quarter’s bill is due.

November 

  • Speaking of open enrollment, now is the time to make sure you have spent all of your flexible spending account if you have one!  Remember, this is different than an HSA!  A flexible spending account (for healthcare OR childcare) is use it or lose it money.  So, you should use every penny.  [By the way, a health care flexible spending account is different from a dependent care flexible spending account where you can opt to take pre-tax money to pay for childcare, daycare, etc… you’d think they would name these things differently.  Simply way too confusing!  Either way, you lose both if you don’t use them.]
  • As above, make sure you have used every penny of your dependent care flexible spending account if you have one.

December

  • This is another great month to check in on your semi-annual Net Worth update.  Check back to June for more details.
  • Also, if you are > 70.5 years old or have an inherited IRA, all RMD’s (Required Minimum Distributions) are due to be taken by 12/31.
  • If you were left an inheritable IRA (IRS publication), this is month by which (one year after the death) you must elect to receive a life-long distribution.  If you don’t, you will default into the five year option where all funds must be given to you, regardless of your tax situation.
  • Last month for charitable contributions to lower your tax bill!

The Time-line Method

Any good financial plan involves adjustments. Every day, every month, six months, year, five years, etc.

Every…

…day be intentional about spending.

…week check your spending to make sure you are on target.  Budget or track spending with mint or personal capital.

…month perform your monthly budgeting plan for the first six months of trying to right the ship. Then check every three to make sure still on same course.

three months check your net worth for encouragement and to make sure you are heading in the right direction.

six months check your credit report to make sure nothing is wrong.  If you don’t plan on any major purchases consider freezing everything.

…year check to make sure your asset classes are where they ought to be.  Actually, you can do this every 1-3 years depending on your preference.  Probably shouldn’t do it too much because then it encourages you to change things too often and look at your portfolio.  Investors that set it and forget it do better.  Those that check more often tend to lose more money.

…Every five years consider aggressiveness of assets (stock to bond ratio).

Let me know if I’ve left anything out and I’ll toss it in!  Leave a comment below.  

TPP

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